IRS Faces Challenges in Enforcing Compliance on Foreign Bank Accounts
The Internal Revenue Service (IRS) is encountering difficulties in enforcing compliance among taxpayers with large foreign bank accounts, as highlighted in a recent report by the Treasury Inspector General for Tax Administration (TIGTA). The report focuses on the Foreign Account Tax Compliance Act (FATCA), which mandates U.S. taxpayers to report specified foreign financial assets. Despite identifying 405 taxpayers with significant foreign account balances who appeared noncompliant, the IRS has conducted examinations on only a small fraction and issued few penalties. The IRS's Offshore Private Banking Campaign, aimed at addressing noncompliance, has had limited success, with only 12 out of 164 referred cases examined, resulting in $39.7 million in additional taxes and $80,000 in penalties. TIGTA recommends the IRS establish performance measures to assess the effectiveness of the FATCA program. 
