GAO - Report on IRS offshore disclosure, compliance efforts 

April 26: The U.S. Government Accountability Office (GAO) today publicly released a report summarizing its review of the second IRS Offshore Voluntary Disclosure Program (the 2009 OVDP).

The GAO report [PDF 3.51 MB]—Offshore Tax Evasion: IRS Has Collected Billions of Dollars, but May be Missing Continued Evasion (GAO-13-318, dated March 27, 2013):

  • Describes the nature of the noncompliance of 2009 OVDP participants
  • Determines the extent to which the IRS used the 2009 OVDP to prevent noncompliance
  • Assesses IRS efforts to detect taxpayers trying to circumvent taxes, interests, and penalties that would otherwise be owed


As of December 2012, four IRS offshore programs resulted in more than 39,000 disclosures by taxpayers and over $5.5 billion in revenues collected. For the 2009 OVDP, the GAO reported that:

  • Nearly all program participants received the standard offshore penalty—20% of the highest aggregate value of the accounts—meaning the account value was greater than $75,000 and taxpayers used the accounts (e.g., made deposits or withdrawals) during the period under review.
  • The median account balance of the more than 10,000 cases closed to date under the 2009 OVDP was $570,000.
  • Participant cases with offshore penalties greater than $1 million represented about 6% of all 2009 OVDP cases, but accounted for almost half of all offshore penalties.
  • Taxpayers disclosed a variety of reasons for having offshore accounts, with more than half having Swiss bank accounts.

Using 2009 OVDP data, the IRS identified bank names and account locations that helped it pursue additional noncompliance. Based on a review of cases, the GAO found examples of immigrants who stated in their 2009 OVDP applications that they were unaware of their offshore reporting requirements, and IRS officials said they have not targeted outreach efforts to new immigrants.

The IRS detected some taxpayers with previously undisclosed offshore accounts attempting to circumvent paying the taxes, interest, and penalties that would otherwise be owed. Still, based on its review of IRS data, the GAO found that the IRS may be missing attempts by other taxpayers attempting to do so.

The GAO analyzed amended returns filed for 2003-2008, matched them to other information available to the IRS about taxpayers' possible offshore activities, and found many more potential quiet disclosures than IRS detected.

Also, the GAO found that the IRS has not researched whether sharp increases in taxpayers reporting offshore accounts for the first time is due to efforts to circumvent monies owed. From 2007-2010, the IRS estimated that the number of taxpayers reporting foreign accounts nearly doubled to 516,000.

GAO recommendations

The GAO recommended that the IRS:

  • Use offshore data to identify and educate taxpayers who might not be aware of their reporting requirements
  • Explore options for employing a methodology for more effective detection, pursue “quiet disclosures,” and implement the best option
  • Analyze first-time offshore account reporting trends to identify possible attempts to circumvent monies owed and take action to allow for taxpayer compliance

©2013 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

The KPMG logo and name are trademarks of KPMG International.

KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever.

The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

Direct comments, including requests for subscriptions, to
For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

+ 1 202 533 4366

1801 K Street NW
Washington, DC 20006.


Current and future KPMG clients may subscribe to TaxNewsFlash email alerts.

Email your contact information.

TaxNewsFlash-United States by year