"People should know tax hucksters are in business, and the IRS is working to put the hucksters out of business," Grassley said. "The numbers are staggering. About 740,000 Americans used abusive schemes in 2000, involving billions of dollars. They say you can't avoid death and taxes, but it looks like a lot of people are avoiding at least one of them. Behind those staggering numbers are the stories of people's lives broken and ruined. People go to prison for cheating on their taxes. It's just not worth it for anyone."
Grassley's comments came at a hearing, "Schemes, Scams and Cons, Part II: the IRS Strikes Back," at which a series of prisoners, their family members, and tax scheme victims testified about the devastating effect of falling for a tax scam. The hearing came one year after a hearing Grassley convened as then-chairman to highlight tax schemes and urge the IRS to maintain strong enforcement of those scams.
Last year's hearing focused on Internet-based tax avoidance scams. This year, many of the witnesses described their use of offshore accounts and foreign countries to skip out on their federal tax obligation. A California doctor, now a prisoner, described his involvement in a scam that set up a series of trust funds in foreign countries to hide money from the IRS. A tax expert described how easy access to foreign accounts via the Internet and credit and debit cards have caused offshore tax evasion to grow "geometrically."
Grassley said the IRS has started to take aggressive steps to police the latest growing scheme ? the establishment of offshore accounts in a tax haven country with a credit card or debit card being used to draw down money from the accounts. "Those people who are engaged in these offshore tax schemes should listen up," Grassley said. "It's time to come clean because the IRS is going to know whose hands are dirty."
Grassley said he is pleased with the IRS' enforcement of these tax scams, but he urged the IRS to balance its enforcement with safeguarding taxpayers' rights. Grassley has made this point repeatedly since 1997, when the Finance Committee exposed a series of flagrant abuses of power by the IRS toward individual taxpayers.
"My position on IRS enforcement is the same as it was in 1997," Grassley said. "Now, as then, I expect the IRS to enforce tax laws while protecting all taxpayers' rights and using its resources wisely before seeking ever-bigger budgets. Now, as then, I expect IRS officials to be able to walk and chew gum at the same time."