Entries in Tax Fraud (2)


Super-Rich Hide $21 Trillion in Secret Tax Havens, Says Tax Justice Network

Adam Gault/Thinkstock(NEW YORK) -- The super-rich are hiding at least $21 trillion in accounts outside their home countries, according to a report by an activist group called the Tax Justice Network.

The wealth hidden in these tax shelters is the equivalent of the United States and Japanese economies combined, according to the report titled “The Price of Offshore Revisited.”

“The hidden offshore sector is large enough to make a significant difference to all or conventional measures of inequality, ” wrote the lead author, James S. Henry, a former McKinsey & Co. chief economist.

“Since most of the missing financial wealth belongs to a tiny elite, the impact is staggering. For most countries, global financial inequality is not only much greater than we suspected, but it has been growing much faster,” he said.

Daniel N. Shaviro, a professor of taxation at New York University, told ABC News a lot of what’s happening is tax fraud.  He said the report highlights that there are wealthy people who don’t want to pay taxes -- and their home countries don’t have enforcement mechanisms in place, so they can get away with it.

In a list of the top 20 countries experiencing “global flight wealth,” China ranks as number one with $1.19 trillion. It is followed by Russia, Korea, Brazil, and Kuwait.

“Often these countries in general have not been rich for as long as the U.S. or England so they may not have both the rule of law and their enforcements may not be as well developed,” said Shaviro.

Using data from the World Bank, the IMF, the United Nations, central banks, the Bank for International Settlements and other sources,  the report said 100,000 people worldwide were responsible for $9.8 trillion in wealth held offshore.

And who managed the money?

According to the study, UBS, Credit Suisse and Goldman Sachs are the top three private banks handling offshore accounts for the super-rich.

“It turns out that this offshore sector -- which specializes in tax dodging -- is basically designed and operated, not by shady no-name banks located in sultry islands, but by the world’s largest private banks, law firms, accounting firms, headquartered in First World capitals like London, New York and Geneva,” wrote Henry.

Copyright 2012 ABC News Radio


Identity Thieves 'Make It Rain' Cash with Fraudulent Tax Refunds

Justin Sullivan/Getty Images(WASHINGTON) -- Police in Tampa, Fla. knew something was up when they noticed many of their biggest drug dealers were no longer on the streets. When one of the drug dealers was pulled over in a traffic stop, instead of finding drugs in the car police found large numbers of pre-paid debit cards and ledgers with social security numbers.

Identity theft involving tax fraud is increasing faster than law enforcement and government officials can deal with it, according to testimony Friday before a House Oversight subcommittee. Identity theft to scam fraudulent tax refunds from the government has increased 100 percent in just three years.

"As of August 31 of this year, IRS incident tracking reports indicated that the numbers of taxpayers affected by identity theft has more than doubled since 2008 to over 580,000 taxpayers this year alone,” said J. Russell George, Treasury Department Inspector General for Tax Administration.

The crime has become too easy. It’s like a party, according to Rep. Richard Nugent, R-Fla., whose district has a problem with tax related identity theft. “Tampa police department has busted what the lawbreakers call ‘Make it Rain’ parties, where criminals get together in a hotel room with internet access and file fake return after fake return,” Nugent told the committee.

Chances of getting caught and punished are low because each fraud case amounts to an average of $3,400, often too little to merit prosecution. To make putting the criminals behind bars even more difficult, the IRS is limited by law in sharing information from a taxpayers return with local law enforcement authorities.

Officials say once someone gets hold of a name, social security and date of birth, they have enough information to go on line, file a fraudulent tax return, and seek a tax credit.

"In 2010 IRS paid over $12 million to people who were listed as deceased,” said Rep. Todd Platts, R-Pa., the chairman of the subcommittee on Government Organization. “Service members who were killed in action defending this great nation are often targets of identity thieves who often use their information to steal tax returns from their families,” Platts added.

Making matters even worse, Platts said, “In 2010 IRS issued 4.2 billion in tax credits to individuals who were unauthorized to work in the United States.”

For the victims of tax fraud identity theft, the people who had fraudulent tax returns filed in their names, getting the problem fixed and their lawful refund paid could take a year-and-a-half. “A typical path for an identity theft refund case that is not complex may take as long as 18 months to resolve,” George told the subcommittee.

Democratic leader Rep. Edolphus Towns, of New York, felt it was too long to wait. “It is unacceptable to have innocent taxpayers waiting 12 to 18 months to verify their identity before a replacement refund check is issued,” he said. “We can and should do better.”

At the hearing, government officials vowed to do more to reduce identity theft tax fraud even though their budgets and staffs are likely to be cut to save money.

Copyright 2011 ABC News Radio

ABC News Radio