The IRS has issued GIIN numbers to more than 128,000 entities in eight FATCA partner jurisdictions linked to Brockman, the Senate report showed. For entities like those tied to Brockman, obtaining GIINs involves a self-certification process in which applications “are almost always approved without meaningful investigations,” the committee found.
The committee, which interviewed IRS officials for its study, wrote that a lack of resources has “significantly hindered” the agency’s enforcement activities and ability to crack down on tax evasion by wealthy Americans, as was intended under FATCA.
“Urgent steps need to be taken to ensure that the wealthy taxpayers are not abusing this ‘shell bank’ loophole and other weaknesses with FATCA enforcement to hide their assets offshore and evade paying their fair share,” the Senate report says.
Given the IRS’s severe shortage of resources, Brockman’s scheme may have gone undetected by the agency or federal prosecutors if not for evidence provided by a Vista whistle-blower and the cooperation of several co-conspirators, the study said.
“The committee strongly supports immediate action to make it more difficult for wealthy tax cheats to stash funds overseas in secret offshore accounts,” the report said.
Among its recommendations are: Congress and the Treasury should toughen due-diligence requirements for large money transfers; screen GIIN applications more rigorously; strengthen the IRS Whistleblower Office; and add IRS resources to audit large foreign partnerships like those managed by Vista Equity Partners.
This article was provided by Bloomberg News.