IRS Probes Audit Firms on Tax Shelters

The Internal Revenue Service plans to hold a conference call on July 8 with the six largest audit firms to convince them to do more to help track the use of secret foreign bank accounts for tax evasion.

Bloomberg News reported that IRS deputy commissioner Barry Shott wrote an e-mail to the firms in which he said the IRS was concerned about what it was "seeing and hearing" about the practices of some foreign banks. The IRS wants to discuss with the auditing firms the Qualified Intermediary program, which was launched in 2000 as a way for the IRS to keep tabs on U.S. taxpayer funds in foreign bank accounts.

The IRS has been probing the use of tax shelters in Switzerland, Lichtenstein and other countries.

Earlier this week, a judge gave the IRS the authority to serve a "John Doe" summons ordering UBS to provide information about U.S. taxpayers who use Swiss bank accounts to evade taxes (see Justice Department Seeks UBS Taxpayer Records). In June, a former UBS banker, Bradley Birkenfeld, pleaded guilty to conspiring to defraud the IRS by helping clients avoid U.S. reporting requirements on income in Swiss bank accounts.

In February, the IRS said it was beginning enforcement actions against more than 100 U.S. taxpayers who had been sheltering their funds in secret bank accounts in Liechtenstein (see IRS Cracks Down on Liechtenstein Tax Evaders). Congress has also been pushing legislation to crack down on offshore tax havens (see Tax Haven Legislation Gaining Momentum).