No tax solution is a silver bullet, but FiveThirtyEight notes three contributing factors enabling many to side-step paying what is mandated. In addition to a weakened Internal Revenue Service (which collected $10 billion from audits in fiscal year in 2016, half of what it did in 2010), the article notes that the U.S. tax code particularly enables small businesses to cheat as well, “In these businesses ... the people earning the income are the same ones who decide what information to share with the IRS. There is no third party—an employer or investment manager—to pass those details along in a non-self-interested way. And while the owner-workers are still expected to report every dollar they get from clients, along with a fair accounting of appropriate deductions, that doesn’t always happen.” The third factor contributing to tax evasion was an argument made in a working academic paper claiming that political parties in office influence evasion by different businesses.
With the Offshore Voluntary Disclosure Program closing on Sep. 28, 2018, there will no longer be a formal IRS program for resolving unreported income and informational return non-compliance with a set penalty structure. So, what now? According to Jim Mastracchio, partner with Eversheds Sutherland (US) LLP, several other procedures remain in force for certain types of non-willful, non-compliance, particularly the Streamline Filing Compliance Procedure. “The streamline procedure has been very helpful because qualifying taxpayers can correct the errors that were unintentional and eliminate or reduce their penalty exposure. Under the procedure, only three years of amended income tax returns are required, and there can be zero penalties for non-compliance with informational return filing obligations,” explained Mastracchio. The IRS has asked for comments from practitioners as to how best to deal with willful non-compliant situations after OVDP ends.
A Tiger Woods Trickle Down Effect?
Tiger Woods has been back on the leaderboard these past few weeks, and the return of one of golf’s best players has reverberated into the economy. Everyone from golf course bartenders to cable channels noticed enthusiasm for Woods’ return, translating into more spending and viewers, according to Yahooo Finance. His improved performance also comes at a time when rounds of golf played in the U.S. have shrunk, leading Nike and Adidas to exit the golf club business.
