U.S.’ New Efforts to Curb Tax Evasion

Last updated on June 3, 2022

It is becoming tougher for U.S. taxpayers to hide income in offshore bank accounts. The U.S. has been making agreements with various governments to encourage transparency of the financial transactions of U.S. taxpayers overseas.

Tax evasion by using offshore bank accounts, especially in tax havens, is rampant. To counter tax evasion, the U.S. government has been making efforts to curb tax evasion through its Offshore Voluntary Disclosure Program (OVDP) and intergovernmental agreements under Foreign Account Tax Compliance Act (FATCA).

Tax evasion is one of the major tax frauds that contribute to the loss of billions to the Treasury each year. To improve tax compliance in a slowly recovering economy, the U.S. is looking to limit tax evasion as one of the methods to increase revenue.

The U.S. recently finalized a deal with the Swiss government to obtain tax sensitive information of taxpayers who hide unaccounted income in Swiss bank accounts. After the Swiss deal, the U.S. has now entered into an agreement with Germany to improve tax information sharing. Under FATCA, the U.S. is making agreements with the governments of various countries regarding offshore bank accounts.

It is becoming increasingly difficult for U.S. taxpayers to hide unaccounted money overseas to evade taxes in the U.S. Mostly, wealthy taxpayers and large corporations indulge in large scale tax evasion using tax havens. The recent efforts by the U.S. authorities are expected to bring down tax evasion drastically.