IRS’ Fight against Tax Evasion

Last updated on September 17, 2023

The IRS has been successfully fighting tax evasion by making agreements under FATCA (Foreign Account Tax Compliance Tax) with the governments of various countries. By improving the transparency in the financial transactions American taxpayers conduct overseas, the incidents of tax evasion have been reduced.

FATCA also requests details from foreign financial institutions when they conduct transactions with American citizens. As many banks in tax havens provide benefits to American taxpayers and allow the potential for evading taxes in the U.S., stricter guidelines help prevent questionable practices. The IRS has already made agreements under FATCA with many countries that are considered tax havens, including Switzerland and Ireland.

Though progress has been made, legal tax evasion still remains a major problem for the country. There are recent cases of corporations using inversions to evade millions of dollars in taxes. If both legal and illegal tax evasion can be curtailed, the impact to the government’s revenue stream could be in the billions.