United States Government Accountability Office

GAO Report to the Committee on Finance, 

U.S. Senate 

TAX 

ADMINISTRATION 

Additional Time 

Needed to Complete 

Offshore Tax Evasion 

Examinations 

March 2007 

 

GAO-07-237 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

March 2007

TAX ADMINISTRATION

Additional Time Needed to Complete 

Highlights of GAO-07-237, a report to the Offshore Tax Evasion Examinations 

Committee on Finance, U.S. Senate 

Much offshore financial activity is 

not illegal, but numerous illegal 

offshore schemes have been 

devised to hide or disguise the true

ownership of income streams and 

assets. IRS studies show lengthy 

development times for some

offshore cases, which suggests that 

time or the lack thereof could be an 

impediment to effectively 

addressing offshore schemes. 

GAO was asked to (1) compare 

offshore and nonoffshore 

examination cases and determine 

whether the 3-year statute of 

limitations reduces offshore

assessments, (2) compare 

enforcement problems posed by 

offshore cases to those where 

Congress has previously granted an 

exception to the statute, and 

(3) identify possible advantages 

and disadvantages of an exception 

to the statute for offshore cases.

To address these objectives, GAO 

analyzed IRS data, reviewed

examination files and other 

documents, and interviewed IRS

officials and others in the tax 

practitioner and policy 

communities.

What GAO Recommends

To provide IRS with additional 

flexibility in combating offshore

schemes, Congress should consider

a longer statute period for 

taxpayers involved in offshore 

activity. In e-mailed comments on

a draft of this report, IRS expressed

agreement that a longer statute 

makes sense and should enhance

compliance. 

Examinations involving offshore tax evasion take much more time to 

develop and complete than other examinations for reasons such as technical 

complexity and the difficulty of obtaining information from foreign sources. 

When examinations are completed, the resulting median assessment from an

offshore examination is almost three times larger than from other types of 

examinations. However, due to the 3-year statute, the additional time needed

to complete an offshore examination means that IRS sometimes has to 

prematurely end offshore examinations and sometimes chooses not to open 

one at all, despite evidence of likely noncompliance. Although data were not 

available to measure the effect of the statute on assessments, IRS agents and 

managers told GAO that overall assessments for offshore cases are lower 

than they would be if IRS had more time to work these cases. 

Median Assessment Amount by Number of Examination Days, Examinations Closed with an

Assessment, Fiscal Years 2002–2005 

0

20

40

60

80

100

120

More than

1095

900-

1095

720-

899

540-

719

360-

539

180-

359

0-

179

Assessment dollars in thousands

Source: GAO analysis of IRS data.

Total examination days

Offshore median tax assessment

Nonoffshore median tax assessment

Some offshore examinations exhibit enforcement problems similar to those 

where Congress has granted a statute change or exception in the past. For 

example, Congress changed the statute for certain abusive tax shelters that 

involved technical complexity and dilatory tactics on the part of taxpayers.

Through discussions with IRS officials and others in the tax practitioner and 

policy communities, GAO identified advantages and disadvantages to such 

an exception. Advantages included increased flexibility for IRS to direct 

enforcement resources to egregious cases of noncompliance and a possible 

deterrent to future noncompliance. Disadvantages included increased 

uncertainty and lack of closure for taxpayers. Our commenters also 

discussed design options to mitigate some of the disadvantages of a statute 

extension, such as making an exception apply to all taxpayers having 

offshore accounts/entities, and thereby, mitigating taxpayer uncertainty and 

lack of closure. 

www.gao.gov/cgi-bin/getrpt?GAO-07-237.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Michael 

Brostek at (202) 512-9110 or 

brostekm@gao.gov. 
Contents 

Letter 1

Results in Brief 3

Background 4

Offshore Examinations Take Longer Than Other Examinations, so 

the 3-Year Statute Can Lead to Lower Assessments Than Would 

Otherwise Be Possible 7 

Some Offshore Examinations Present Enforcement Problems 

Similar to Those Where Congress Granted Changes to the 

Statute 19

Changing the Statute Would Necessitate Weighing Advantages and 

Disadvantages 27

Conclusions 30

Matter for Congressional Consideration 31 

Agency Comments and Our Evaluation 32 

Appendix I Objectives, Scope, and Methodology 33 

Appendix II GAO Contact and Staff Acknowledgments 35 

Tables 

Table 1: Median Development Days by Examination Type, Fiscal 

Years 2002–2005 9 

Table 2: Median Examination Days by Examination Type, Fiscal 

Years 2002–2005 9 

Table 3: Median Total Cycle Time by Case Type, Fiscal Years 

2002–2005 10

Table 4: Median Assessments by Examination Type, Fiscal Years 

2002–2005 10

Table 5: Assessment Dollars per Examination Hour by 

Examination Type, Fiscal Years 2002–2005 11 

Table 6: Disposition of Cases When a Disciplinary Action Stemming 

from a Barred Statute Was Initially Recommended, Fiscal 

Years 2005–2006 12 

Table 7: Views of Interested Parties in General on Changing the 

Statute for Offshore Examinations 28 

Table 8: Views of Interested Parties on Design Options for 

Changing the Statute for Offshore Examinations 29 

Page i GAO-07-237 Offshore Tax Evasion
Figures 

Figure 1: Notional Representation of IRS Audit Selection Process 6 

Figure 2: Median Assessment Amount by Number of Examination 

Days, All Examinations Closed with an Assessment, Fiscal 

Years 2002–2005 15 

Figure 3: Median Assessment Amount by Number of Examination 

Days, Field Examinations Closed with an Assessment, 

Fiscal Years 2002–2005 16 

Abbreviations 

AIMS Audit Information Management System 

ATS abusive tax shelter 

FTB California Franchise Tax Board 

IBC international business corporation 

IRC Internal Revenue Code 

IRS Internal Revenue Service 

LAO California Legislative Analyst’s Office 

LDC Lead Development Center 

LLC limited liability corporations 

LLP limited liability partnership 

SB/SE IRS Small Business/Self Employed division 

TIGTA Treasury Inspector General for Tax Administration

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Page ii GAO-07-237 Offshore Tax Evasion
United States Government Accountability Office

Washington, DC 20548 

March 30, 2007 

The Honorable Max Baucus 

Chairman 

Committee on Finance 

United States Senate 

The Honorable Charles E. Grassley 

Ranking Member 

Committee on Finance 

United States Senate 

In recent years, the Internal Revenue Service (IRS) has observed a 

significant increase in offshore activity among U.S. taxpayers. More and 

more taxpayers have been observed attempting to “expatriate” their 

income and assets. Making investments or doing business internationally 

is legal, but numerous schemes have been devised in which the true 

ownership of income streams and assets has been hidden or disguised 

using offshore activity, which is not legal. Some schemes can be as simple 

as taking unreported income and personally traveling to a tax haven

country and depositing the cash into a bank account. Other schemes are 

more elaborate, involving numerous domestic and foreign trusts, 

partnerships, nominees, foreign financial accounts, offshore credit/debit 

cards, and multilayered transactions. Like all forms of noncompliance, 

offshore schemes add to the tax gap—the difference between taxes owed 

and taxes paid on time—and shifts more of the tax burden onto compliant 

taxpayers. Such schemes also can fuel a perception that the tax system is 

not equitable and can erode honest taxpayers’ faith in the voluntary 

compliance system. When IRS discovers an offshore scheme, it has 3 years 

from when the tax return was filed in which to work on uncovering the 

scheme and assessing any additional tax. This is known as the 3-year 

statute of limitations on assessments. 

In recognizing the serious problem posed by offshore tax evasion, you 

asked us to identify any impediments that may exist to better combating 

these schemes. An IRS study shows lengthy examination times for some 

offshore examinations, which suggests that time or the lack thereof could

be an impediment to effectively addressing offshore schemes. This report 

focuses on this possible impediment. Our objectives were to (1) compare 

the length of and recommended assessments yielded by offshore and 

nonoffshore examinations and determine whether the 3-year statute of 

Page 1 GAO-07-237 Offshore Tax Evasion
limitations reduces recommended offshore assessments, (2) determine 

whether or not enforcement problems posed by offshore examinations are 

similar to enforcement problems that led Congress to grant exceptions to 

the statute in other situations, and (3) identify possible advantages and 

disadvantages of an exception to the statute for offshore examinations. 

To do our work, we (1) analyzed IRS data, reports, publications, and other 

documentation providing insight into the characteristics, complexity, and 

size of the offshore tax evasion problem;1

 (2) compared IRS data on the

amount of time required to complete examinations involving an offshore 

component2

 with those lacking such a component and the recommended 

assessments from those examinations; (3) reviewed selected IRS files to 

illustrate examinations of returns involving offshore components; 

(4) researched the history of the federal statute of limitations for 

assessments to include legislation proposed between 2003 and 2006 that

included references to either offshore tax evasion or the statute of 

limitations; (5) interviewed representatives of California’s taxing authority,

the California Franchise Tax Board (FTB), and reviewed documents 

related to a recent change in California’s statute related to certain abusive 

tax shelters; (6) interviewed revenue agents and managers with expertise

in offshore cases to develop an understanding of IRS enforcement 

activities; and (7) interviewed IRS officials and others in the tax 

practitioner and policy communities about their views on extending the 

examination period for returns involving offshore schemes. We assessed 

the reliability of the IRS data that we used and found that it was 

sufficiently reliable for our purposes. The universe of IRS examinations 

with an offshore component included individual taxpayers, smaller and 

larger corporations, and other taxable entities. The database of all 

nonoffshore examinations we used for comparison similarly included a 

full range of taxpayers. Details on our methodology can be found in 

 1

Tax evasion is any method of willfully avoiding or reducing taxes that is not permitted by 

law. Tax evasion is distinguished from “tax avoidance” which denotes the legal 

interpretation of the tax laws to legitimately minimize tax liability. In this report, we use 

the term “tax evasion” to describe the target of the actions IRS takes to (1) identify 

underreported or unreported tax liabilities, either as a result of tax evasion or abusive 

transactions or claims subject to disallowance under existing law, and (2) assess the 

correct amount of taxes owed by the taxpayer and any penalties that may apply. Separate

from the assessment of taxes owed by the taxpayer, tax evasion is itself a crime punishable 

under IRC 7201. 

2

IRS assigns a “project code” to those examinations whose main component is offshore tax 

evasion, and for the purposes of this review, those case files with one of six offshore

project codes are considered offshore tax evasion. 

Page 2 GAO-07-237 Offshore Tax Evasion
appendix I. We did our work from June 2005 through February 2007 in 

accordance with generally accepted government auditing standards. 

Identifying possibly noncompliant returns, gathering appropriate evidence, 

and completing an examination takes much more time for IRS for tax 

returns involving abusive offshore transactions than other types of returns. 

Where IRS is able to complete examinations involving abusive offshore 

transactions, they generally result in larger assessments than other types 

of examinations. IRS officials told us that because the same 3-year statute 

of limitations that applies to nonoffshore examinations applies to offshore 

examinations, the additional time needed to complete an offshore 

examination means that IRS sometimes has to end offshore examinations 

before the examination is complete, and sometimes chooses not to open 

an examination at all, despite evidence of likely noncompliance. Although 

data were not available to measure the effect of the statute of limitations 

on assessments, IRS revenue agents and their managers told us that 

overall assessments for offshore examinations are lower than they would 

be if IRS had more time to work these examinations. 

Results in Brief 

Some offshore examinations exhibit enforcement problems similar to 

those where Congress has granted a change or exception to the statute in

the past. For example, the issues that led to the creation of the statute 

exception for certain abusive tax shelters are similar to those exhibited by

offshore examinations. Past statute changes and exceptions provide 

precedent for changing the statute for offshore examinations. 

Through discussions with IRS officials and others in the tax practitioner 

and policy communities, we identified both advantages and disadvantages

of extending the statute of limitations. Among the advantages were 

increased flexibility for IRS to direct enforcement resources to egregious 

cases of noncompliance and a possible deterrent effect against future 

noncompliance. Disadvantages included increased uncertainty and lack of

closure for taxpayers as well as increased taxpayer perceptions of 

unfairness unless an extension to the statute for assessments is matched 

by an extended refund period. Our commenters also discussed design 

options to mitigate some of the disadvantages of the statute extension, 

such as making an exception apply to all taxpayers having offshore 

accounts/entities, and thereby, mitigating taxpayer uncertainty and lack of 

closure. Maintaining symmetry between the statutes for assessments and 

refunds was also mentioned as mitigating taxpayer perceptions of 

unfairness about extending the statute for assessments. 

Page 3 GAO-07-237 Offshore Tax Evasion
In this report, we suggest that Congress make an exception to the 3-year 

civil statute assessment period for taxpayers involved in offshore financial 

activity. In comments on a draft of this report, IRS officials commented 

that a longer statute for offshore examinations makes sense and should 

enhance compliance. IRS also provided comments on several technical 

issues and legal issues, which we incorporated in this report where 

appropriate.

It is perfectly legal for U.S. taxpayers to hold money offshore. It is illegal, 

however, for a taxpayer to not disclose substantial offshore holdings, to 

not report income earned in the United States and “hidden” through 

offshore arrangements, and to not report income earned offshore to IRS 

on the taxpayer’s tax return. If U.S. taxpayers own an offshore business 

such as a foreign corporation, they are required to disclose that holding to 

IRS on their tax return. When applied to abusive transactions, IRS 

generally uses the term “offshore” to mean a country or jurisdiction that 

offers financial secrecy laws in an effort to attract investment from outside

its borders.3 When referring to a financial institution, “offshore” refers to a 

financial institution that primarily offers its services to persons domiciled 

outside the jurisdiction of the country in which the financial institution is 

organized. 

Background 

Abusive offshore schemes are often accomplished through the use of 

limited liability corporations (LLC), limited liability partnerships (LLP), 

international business corporations (IBC), and trusts, foreign financial

accounts, debit or credit cards, and other similar instruments. According 

to IRS, the schemes can be complex, often involving multiple layers and 

multiple transactions used to hide the true nature and ownership of the 

assets or income that the taxpayer is attempting to hide from IRS. 

IRS has multiple programs and techniques used to select potentially 

noncompliant tax returns for examination. One source is a computer 

model designed to predict returns that, if audited, would be most likely to 

result in additional taxes owed. Other sources that prompt an examination 

include referrals from inside or outside IRS, information from third 

parties, and indications of fraud or noncompliance from other audits. 

 3

IRS officials noted that although many enforcement problems occur in certain foreign

jurisdictions that are characterized by strict financial privacy regimes, the term “offshore”

broadly includes the activities of U.S. taxpayers in all foreign transactions. 

Page 4 GAO-07-237 Offshore Tax Evasion
Once IRS has identified a return for an examination, the classification 

process begins. Classification is the process of determining whether a 

return should be selected for examination, what issues should be 

examined, and how the examination should be conducted. IRS guidance 

on classification states that classification should be conducted by an 

experienced examiner. 

Examination is the accumulation of evidence for evaluating the accuracy

of the taxpayer’s tax return. Examiners gather facts to correctly determine 

a taxpayer’s tax liability. Evidence can include the taxpayer’s testimony 

and books and records as well as the examiner’s own observations and 

documents from third parties. Methods for accumulation of evidence 

include analytical tests, documentation, inquiry, inspection, observation, 

and testing. IRS procedures call for examiners to pursue an examination 

to the point where a reasonable determination of correct tax liability can 

be made. In turn, examiners prepare audit reports, which should contain 

all information necessary to ensure a clear understanding of the 

adjustment, if any, and document how the tax liability was computed. 

These reports serve as the basis for assessment actions. An assessment 

records the taxpayer’s liability due.4

IRS examinations are generally of one of three types—correspondence, 

office, or field. The simplest examinations usually cover one to two tax 

issues handled by a lower-graded examiner through correspondence. More 

complex examinations are done by meeting with taxpayers or their 

representatives in IRS offices. The most complex examinations are done 

through revenue agent field visits to taxpayer locations. Only about 16 

percent of all IRS examinations from 2002 through 2005 were conducted 

through field examinations, but 98 percent of offshore examinations were 

of this type. About three-fourths of nonoffshore examinations are handled

through correspondence.

IRS does not classify every return that is filed, nor does it examine every 

case file that is classified, even if IRS determines that examining the tax

return would likely yield an assessment of additional taxes owed. Figure 1 

provides a notional representation of the process of taking the over 130 

million individual income tax returns that were filed in fiscal year 2004 

 4

Analyses in this report involve recommended assessments at the close of the examination. 

Recommended assessment amounts can be reduced if the taxpayer takes his or her case to 

IRS Appeals or to Tax Court. 

Page 5 GAO-07-237 Offshore Tax Evasion
through the steps that lead to audits of a much smaller number of those 

returns. 

Figure 1: Notional Representation of IRS Audit Selection Process 

Over 130 million 

individual returns filed 

Returns

selected for 

screening

Screened 

returns

forwarded to 

classification to 

be considered

Returns chosen 

to go through 

classification

Returns

forwarded to 

examination 

to be 

considered

Returns

chosen for 

examination

Examination 

process

Fraud cases

In limited circumstances, 

the law allows IRS 

additional time to 

complete examinations 

No time 

limit

Additional

1–3+ years

3 years

Civil statute 

of limitations

Return filed

Source: GAO analysis of IRS data.

Civil examination

Criminal investigations

In most cases, the law gives IRS 3 years from the date a taxpayer files a tax 

return to complete an examination and make an assessment of any 

additional tax. For example, if a taxpayer filed a tax return on April 15, 

2000, IRS had until April 15, 2003, to finish any examination of that return 

and make an assessment of additional taxes owed by the taxpayer. This 

statute of limitations for assessments is in effect for all examinations with 

exceptions allowing longer periods for certain taxpayer actions or 

omissions such as fraud or substantial understatement of gross income (in 

excess of 25 percent of the amount of gross income stated on the return). 

Taxpayers may also waive the 3-year assessment limitation through 

written consent. 

Page 6 GAO-07-237 Offshore Tax Evasion
In general, it takes longer for IRS to identify and examine tax returns 

involving abusive offshore transactions than IRS needs in nonoffshore 

cases because of the added complexity of examining offshore 

transactions. Where IRS is able to complete examinations involving 

abusive offshore transactions, they generally result in larger assessments 

than other types of examinations. IRS has policies in place to avoid 

violating the statute of limitations, and IRS enforcement personnel told us

that these policies, in conjunction with the longer time needed to complete

offshore examinations, mean some cases are never opened in the first 

place while others are not fully worked because the time allowed under 

the current statute is running out. As a result, they said, overall 

assessments for offshore cases are lower than they would be if IRS had 

more time to work these cases. 

Offshore 

Examinations Take 

Longer Than Other 

Examinations, so the 

3-Year Statute Can 

Lead to Lower 

Assessments Than 

Would Otherwise Be 

Possible 

Offshore Cases Take 

Longer for IRS to Develop 

and Examine 

IRS officials told us that cases involving offshore tax evasion present 

special, time-consuming challenges that other types of cases do not. Tax 

evasion, both domestic and offshore, often involves schemes with many 

layers of deception. IRS officials told us that for domestic tax evasion, 

revenue agents are able to issue summonses to domestic financial 

institutions to uncover the layers of deception the taxpayer created to hide

the source and existence of the funds. In offshore cases, IRS generally 

does not have summons power over offshore financial institutions, and is

often unable to determine the owner of an offshore account or business, 

or determine the source of the funds. Even in cases where IRS is able to 

determine information about offshore funds, an IRS manager told us that 

this process of discovery is much more time consuming than for 

nonoffshore cases. 

Unlike much nonoffshore tax evasion, most possible offshore tax evasion 

cases are not discovered through IRS’s computerized analysis of tax 

returns, but rather through investigations of promoters of offshore 

schemes. Officials told us that several divisions of IRS forward leads on 

the promoters of offshore schemes they discover to revenue agents, who 

develop the cases in order to discover the extent of the promoter’s use of 

offshore schemes. This process takes far longer than computer analysisbased methods of identifying potential noncompliance. 

After developing information that a promoter of offshore schemes illegally

sold schemes to help taxpayers avoid their tax liability, IRS can refer that 

information to the Department of Justice, which can then file a complaint 

in the United States District Court requesting the court to issue an 

injunction against the promoter. In some cases, the injunction will compel 

Page 7 GAO-07-237 Offshore Tax Evasion
the promoter to disclose the clients who purchased the scheme. IRS 

officials told us that it can take years to get a client list from a promoter 

and, even with a client list, there is still much work that IRS needs to do 

before the clients of the offshore schemes can be audited. For example, 

IRS officials told us that they may only get limited information about the 

clients of offshore promoters, and often that information is limited to a 

name and perhaps the city and state where the client lives, so considerable

time may be spent finding the individuals listed by the promoter. 

Time spent developing information on a return before putting it into the

queue for examination shortens the time available to close the 

examination before the 3-year civil statute of limitations expires. Table 1 

compares the median number of days spent in development for offshore 

and nonoffshore examinations from 2002 to 2005.5

 As shown in the table, 

the median offshore case took 184 more calendar days than the median 

nonoffshore case to move from filing to examination. Comparing just field 

examinations, which constituted over 98 percent of offshore examinations 

in fiscal years 2002 through 2005, the difference in median development 

time was 96 days. Some examinations lead to additional examinations of 

the same taxpayer’s returns, such as when a revenue agent identifies 

noncompliance on one return and then reviews prior year returns looking 

for the same problem, or when a taxpayer files a new return while an 

examination is underway. To avoid overstating development time, this 

comparison includes only the number of days between the start of the 

examination and the filing date of the last return filed before the 

examination began.6

 5

A small number of examinations take an especially short or an especially long time to 

develop and complete. Because of this, we generally use medians in this report as the

representation of the central tendency of the data we analyzed. 

6

Because we chose to count development time for only the return filed immediately before

the examination start date, the median development time information in table 1 understates 

development time for examinations that were in fact prompted by an earlier return from

the same taxpayer. This makes our estimate of development time conservative for both 

offshore and nonoffshore examinations. 

Page 8 GAO-07-237 Offshore Tax Evasion
Table 1: Median Development Days by Examination Type, Fiscal Years 2002–2005 

Examination 

type 

Median days in development, 

all examinations 

Median days in development, 

field examinations only

Offshore 504 504

Nonoffshore 320 408

Source: GAO analysis of IRS data. 

Note: Medians in this table are not based on analysis of all examinations. Our calculations included 

only one examination where a single taxpayer is the subject of two or more related examinations. 

Once offshore cases are developed and moved into examination, the 

examinations take longer than nonoffshore cases. Considering all types of

examinations together, the median offshore examination took 90 more 

days than the median nonoffshore examination. Considering field 

examinations alone, the median offshore field examination was 70 days 

longer than the median nonoffshore field examination, as shown in table 2. 

IRS officials told us that this is due to examination complexity and the 

difficulty of identifying and obtaining information from foreign sources. 

Table 2: Median Examination Days by Examination Type, Fiscal Years 2002–2005 

Examination

type 

Total

number of 

examinations

Median number

of days, all 

examinations

Number of field

examinations

only

Median number

of days, field

examinations

Offshore 6,720 275 6,597 279

Nonoffshore 4,134,870 185 653,239 209

Source: GAO analysis of IRS data. 

The total time that elapses between a return being filed and IRS’s closing 

of the examination of that return is referred to as total cycle time and 

provides another type of comparison between offshore and nonoffshore 

cases. As shown in table 3, the median offshore examination took almost 

500 more calendar days overall to close than the median nonoffshore 

examination, a 126 percent difference. The median offshore case took 82 

percent of the statute time versus 36 percent for nonoffshore cases. 

Considering just field examinations, the median cycle times for offshore 

and nonoffshore examinations were closer in length, but the median 

offshore examination was still 194 days longer, a difference of 28 percent.

Page 9 GAO-07-237 Offshore Tax Evasion
Table 3: Median Total Cycle Time by Case Type, Fiscal Years 2002–2005 

All examinations Field examinations only 

Case type

Median cycle 

time, in days

Percentage of

statute time 

used by IRS to

close case 

Median cycle 

time, in days

Percentage of

statute time 

used by IRS to

close case

Offshore 896 82 896 82

Nonoffshore 397 36 702 64

Source: GAO analysis of IRS data. 

Note: The median day figures in tables 1 and 2 are drawn from different populations, so they do not 

add up to the median day figures in table 3. 

Completed Offshore 

Examinations Yield Larger 

Recommended 

Assessments Than Other 

Examinations 

About half of all offshore examinations resulted in a recommended 

assessment of additional taxes due compared to approximately 70 percent 

of nonoffshore examinations. While less frequent, assessments from all 

types of offshore examinations—correspondence, office and field—had a 

median that was nearly 3 times larger than from nonoffshore 

examinations. Considering just field examinations, recommended 

assessments from offshore examinations also had a median that was much 

larger than nonoffshore examinations, though by a smaller margin, as 

shown in table 4. 

Table 4: Median Assessments by Examination Type, Fiscal Years 2002–2005 

All examinations Field examinations only 

Examination

type 

Number of 

examinations

resulting in an

assessment

Median 

assessment, 

in dollars 

Number of 

examinations

resulting in an

assessment

Median 

assessment, 

in dollars

Offshore 3,247 7,933 3,166 7,848

Nonoffshore 2,899,957 2,877 359,272 4,529

Source: GAO analysis of IRS data. 

While yielding larger assessments, the greater amount of time spent on 

offshore examinations means that their yield per hour of direct 

examination time is lower.7

 Considering all types of examinations 

 7

Direct examination hours are different from total cycle time or examination days in that 

they do not include time between actions by IRS, such as time spent waiting for a response 

from the taxpayer or from a financial institution. 

Page 10 GAO-07-237 Offshore Tax Evasion
together, including both those that resulted in an assessment and those 

that did not, offshore examinations yielded less per hour of direct 

examination time than nonoffshore examinations because the number of 

hours spent on those examinations is nearly 4 times longer, on average. 

From 2002 to 2005, IRS examiners spent an average of 46 hours on all 

types of offshore examinations, compared to an average of only 12 hours 

for all types of nonoffshore examinations. Considering only field 

examinations, average hours per examination were 47 for offshore 

examinations versus 62 for nonoffshore examinations, and the difference 

in dollars per hour of direct examination time is greater.8

Table 5: Assessment Dollars per Examination Hour by Examination Type, Fiscal 

Years 2002–2005 

Total dollars per hour of

examiner time, all examinations

Total dollars per hour of examiner 

time, field examinations only

Offshore 1,084 1,073

Nonoffshore 2,156 2,824

Source: GAO analysis of IRS data. 

Note: Unlike table 4, table 5 considers all examinations, including those that did not result in an assessment. 

To Prevent Violating the 

Statute of Limitations, IRS 

Does Not Pursue Some 

Likely Offshore Tax 

Evasion 

IRS has strict policies to prevent examinations from going past the statute 

of limitations because if an assessment is not made within 3 years, the 

statute of limitations bars IRS from making any assessment at all. Such 

instances mean the loss of revenue to IRS and inefficient use of IRS 

examination resources. IRS policies specify that statute expiration dates 

for all tax returns be properly determined, that all records be annotated 

with these dates, and that the cases be closely monitored to prevent 

accidentally running out of time. Revenue agents and managers told us 

that IRS strongly emphasizes the importance of keeping track of these 

dates and avoiding allowing an examination to go past the statute date. 

While the 3-year statute of limitations applies in most cases, some 

exceptions exist under current law. For example, an assessment may be 

made after the 3-year point if the tax return is false or fraudulent or if 

 8

The average of direct time charges on nonoffshore field examinations is affected by a 

small number of examinations that are both very time intensive and result in very high 

recommended assessments. We used averages in this comparison because hours per 

nonoffshore examination are influenced by the large number of very short correspondence 

examinations, resulting in a median of only 1 hour per case. 

Page 11 GAO-07-237 Offshore Tax Evasion
there is a sufficiently large omission of gross income. Taxpayers may also 

agree to waive their statute rights. 

In the rare cases where IRS personnel allow an examination to go past the 

statute without meeting one of the current exceptions to the statute (a 

“barred statute”), the responsible agent and his or her manager must 

prepare a Barred Statute Report and face possible disciplinary action 

because of the examination time spent with no possibility of making an 

assessment. IRS data for fiscal years 2005 and 2006 showed 39 barred 

statutes associated with examinations where a manager made an initial 

determination to recommend a disciplinary action. As shown in table 6, 

most of these barred statutes ultimately resulted in some type of 

disciplinary action. 

Table 6: Disposition of Cases When a Disciplinary Action Stemming from a Barred

Statute Was Initially Recommended, Fiscal Years 2005–2006 

Disciplinary action 2005 2006 Total

No action, withdrawn, closed 3 1 4

Counseling, admonishment, reprimand 20 11 31

Suspension, removal, resignation 3 1 4

Total 26 13 39

Source: GAO analysis of IRS data. 

Note: These disciplinary actions include all types of examination cases, both offshore and 

nonoffshore. 

IRS has created guidance for continuing offshore examinations past the 3-

year point. This guidance permits agents to request permission to carry on

the examination past the 3-year point based on their judgment that, given 

additional time, they will be able to ultimately prove that the examination 

meets one of the following three conditions:9

1. The return is false or fraudulent. IRS defines false or fraudulent as the 

preparation and filing of false income tax returns by claiming inflated 

personal or business expenses, false deductions, unallowable credits, 

or excessive exemptions. 

 9

Other exceptions to the statute are in law. These three exceptions are specified in this 

guidance for carrying an examination past the 3-year statute date without first definitively 

proving that one of the statute exception conditions applies. IRS may also continue an

examination past the 3-year point when taxpayers agree to waive their statute rights. 

Page 12 GAO-07-237 Offshore Tax Evasion
2. There is a sufficiently large omission of gross income (in excess of 25 

percent of the amount of gross income stated on the return) under IRC 

6501(e), in which case the tax may be assessed at any time within 6 

years after the return is filed. 

3. The taxpayer failed to notify the Secretary of the Treasury of certain 

foreign transfers under IRC 6501(c)(8), in which case the statute of 

limitations is 3 years from the date IRS receives the required 

information.10

A conclusion to continue an examination beyond the statute must be 

approved in writing by IRS managers, based on the revenue agent’s 

documentation of the rationale and calculations to support this 

conclusion. In addition, IRS must have made a timely and proper request

to the taxpayer to obtain a consent agreement to extend the statute. The

taxpayer’s refusal to extend the statute or lack of response must be 

documented. If this guidance is followed, no disciplinary action will be 

taken against the IRS managers and agents if the examination ultimately 

does not prove to meet one of the three conditions for making an 

assessment after 3 years. 

The IRS guidance allowing some examinations to go past the normal 

statute period based on the revenue agent’s judgment that an assessment 

will be possible after the 3-year point recognizes the limited time available 

to agents to finalize case-specific facts when the 3-year statute is about to 

expire. The IRS guidance also notes that the Credit Card Summons project 

examinations are generally likely to involve unreported income or fraud as 

well as failure to file information returns reporting foreign transfers. The 

guidance also states that other offshore examinations share many of the

same challenges as Credit Card Summons project examinations including 

complex examinations and securing documents located outside the United 

States.11

 10This exception is limited to just certain transfers associated with foreign corporations,

partnerships and trusts. The exception is further limited to specific issues related to 

transactions with these foreign entities, such as the organization or reorganization of 

foreign corporations and the acquisition of their stock. 

11At the time of our review, IRS had six offshore projects—Credit Card Summons, Offshore

Transactions, Offshore Compliance Initiative Project, Foreign Trusts, Amended Returns

with Offshore Voluntary Compliance Issues, and the Offshore Compliance Project. 

Page 13 GAO-07-237 Offshore Tax Evasion
IRS managers told us that this procedure for continuing examinations 

beyond the statute is cumbersome, time-consuming, and some agents are 

reluctant to use the procedure because of concerns about barred statutes. 

Revenue agents told us that this reluctance stems from the culture of IRS 

examiners where agents are instructed from the time they are hired to 

never let an examination go past the statute of limitations for any reason. 

Despite subsequent assurances from IRS guidance, however, revenue

agents told us that ingrained reluctance to letting the statute of limitations 

pass is still paramount. 

All of the examinations allowed to extend past the statute date under this

guidance represent a gamble on the part of IRS that the examination will 

ultimately meet one of the exceptions to the statute and an assessment 

will be allowed under the law. IRS records show that 1,942 offshore 

examinations were taken past the 3-year statute period from fiscal years 

2002 through 2005. IRS ultimately made assessments on 63 percent of 

these examinations and these assessments were significantly higher than 

assessments from all other types of examinations, with a median 

assessment of about $17,500 versus about $5,800 from offshore 

examinations that were closed within the 3-year statute of limitations and 

$2,900 from all nonoffshore examinations closed within 3 years.12 IRS 

databases do not allow systematic analysis of the approximately 700 

examinations that did not result in an assessment, so we do not know if 

these were accurate returns or if the discovered tax evasion just did not 

rise to the level of fraud or substantial understatement of income. 

For those examinations that closed with an assessment, longer 

examinations did not change the median assessment amount significantly 

for nonoffshore examinations. On the other hand, offshore examinations 

produced much larger median assessments than both shorter offshore 

examinations and all nonoffshore examinations when the examinations 

themselves took 3 years or more, as shown in figure 2. A similar 

relationship is found for field examinations alone, as shown in figure 3. 

 12Considering only field examinations, median assessments from offshore examinations

during this period that resulted in an assessment were very similar—about $17,300 from 

examinations that took longer than 3 years and $5,800 from examinations closed in less

than 3 years. For nonoffshore examinations, field examinations that took longer than 3

years had a median recommended assessment of about $14,000 and those closed within 3

years had a median recommended assessment of about $3,900. 

Page 14 GAO-07-237 Offshore Tax Evasion
Figure 2: Median Assessment Amount by Number of Examination Days, All 

Examinations Closed with an Assessment, Fiscal Years 2002–2005 

0

20

40

60

80

100

120

More than

1095

900-

1095

720-

899

540-

719

360-

539

180-

359

0-

179

Assessment dollars in thousands

Source: GAO analysis of IRS data.

Total examination days

Offshore median tax assessment

Nonoffshore median tax assessment

Page 15 GAO-07-237 Offshore Tax Evasion
Figure 3: Median Assessment Amount by Number of Examination Days, Field 

Examinations Closed with an Assessment, Fiscal Years 2002–2005 

0

20

40

60

80

100

120

More than

1095

900-

1095

720-

899

540-

719

360-

539

180-

359

0-

179

Assessment dollars in thousands

Source: GAO analysis of IRS data.

Total examination days

Offshore median tax assessment

Nonoffshore median tax assessment

Similarly, our analysis of assessment dollars generated per hour of 

examination time (including examinations both with and without 

assessments) showed that the yield increased markedly for offshore 

examinations that take more than 3 years. While average assessment 

dollars per hour of direct offshore examination time are about half of the 

average for nonoffshore examinations, the reverse is the case for 

examinations that go over three years—$6,458 per hour for offshore 

examinations compared to $3,432 per hour for nonoffshore examinations. 

The comparison is nearly the same for field examinations alone—$6,465 

per hour for offshore field examinations and $3,454 per hour for 

nonoffshore field examinations. 

Revenue agents and managers told us that some developed case files are 

not opened for examination because insufficient time remains under the 

statute to make the examination worthwhile. They said that managers and 

agents have leeway in deciding which examinations to work because there 

are usually more developed case files waiting for agents than there are 

Page 16 GAO-07-237 Offshore Tax Evasion
agents to work them. IRS wants agents to work examinations with a good 

likelihood of leading to meaningful assessments; managers told us they 

look for examinations that have both apparent noncompliance and 

sufficient time remaining within the statute to fully develop the apparent

issues. Revenue agents and IRS managers told us that, in order to avoid 

violating the statute, they will often choose case files to examine with 

more time remaining under the 3-year statute of limitations over case files 

with less time remaining but with more likely or more substantial possible 

assessments. As a result, they explained that not all case files in the 

unassigned inventory of case files developed for examination are selected

for examination and many case files are “surveyed,” or closed without 

examination.

13

Two IRS policies could contribute to closing a developed offshore case 

without an examination. One of these policies requires sorting the 

unassigned inventory to identify the areas most in need of examination. 

This policy includes statute year and statute date among the attributes 

used in sorting unassigned inventory. A second policy requires that an 

examiner not begin an examination or requisition any return for audit 

without management approval if fewer than 12 months remain on the 

statutory period for assessment. As described earlier, offshore 

examinations typically require more time to develop than nonoffshore 

examinations, and as a result, offshore examinations in the queue for 

examination would typically be nearer the end of the assessment period 

than nonoffshore examinations. IRS managers explained that this attribute 

of offshore examinations can lead to leaving offshore cases in the queue 

until the statute period ends and then closing the case without an 

examination.

Agents and managers also said that they often choose to end an ongoing

examination nearing the end of the 3-year assessment period without 

making a complete assessment rather than risk taking the examination 

past the statute period, losing revenue, and facing disciplinary action. IRS 

agents and managers told us that they face difficult choices as an 

examination nears the end of the 3-year assessment period and the 

examination is incomplete. On the one hand, the examination can be

discontinued. This choice is the safest for individual IRS agents and 

managers because it avoids the possibility of a Barred Statute Report and 

 13Survey decisions can be made at several levels of management and may also be made by

individual agents. 

Page 17 GAO-07-237 Offshore Tax Evasion
disciplinary actions. However, this choice also results in an assessment 

that does not accurately reflect the extent of a taxpayer’s compliance or 

noncompliance with tax laws because the examination is incomplete. 

Continuing the examination can result in an accurate assessment, but only

if the examination demonstrates one or more of the exceptions to the 

statute described earlier. If the examination does not ultimately 

demonstrate fraud or another basis for an exception, IRS managers and 

agents wasted IRS resources because they are barred from making an 

assessment. Revenue agents told us that they believed that in some cases 

there is “money being left on the table” in the form of unexamined issues 

that could have led to assessments if there had been sufficient time to 

examine them. 

Even where there is sufficient time to work an examination, only a few 

years where a taxpayer was using a particular scheme may be open to 

examination and the early years of a scheme may be past their statute date

before the examination even begins. For example, if IRS is examining a 

taxpayer’s 2005 tax return and discovers a significant understatement in 

the income that the taxpayer reported, the agent can examine some of the 

taxpayer’s previous returns, but unless the revenue agent and manager 

suspect fraud, in which case there is not a statute of limitations, IRS must 

abide by the 3-year statute of limitations on assessments and not examine 

some prior years that taxpayers held money offshore illegally. A senior IRS 

official told us that this is a particularly significant problem because it is

often in the first years of an offshore scheme where the taxpayer moves 

the most money offshore and the most egregious tax evasion takes place, 

so IRS is missing out on significant assessments by not being able to look

back at previous tax returns. 

IRS revenue agents are not able to accurately estimate likely possible 

assessments for case files or tax years that are unexamined. Similarly, in 

cases where an examination is started and subsequently closed without 

some issues being examined due to the statute of limitations, it is not 

possible to estimate the likely assessment from unexamined issues. 

As mentioned earlier, however, we found that 1,942 offshore examinations 

were allowed, either by IRS decision or by a voluntary statute extension 

signed by the taxpayer under examination, to exceed the 3-year statute of 

limitations. Of those, more than 700 were closed without an additional tax

assessment. IRS officials told us that many of the offshore examinations 

that go past the 3-year statute of limitations are very difficult to work due 

to complex financial arrangements and that even with significantly more 

time, some particularly complex and well-hidden offshore schemes would 

Page 18 GAO-07-237 Offshore Tax Evasion
remain very difficult to uncover. IRS data did not show the reasons that 

the 700 offshore examinations that went past the 3-year statute of 

limitations were closed without an assessment. 

Some offshore examinations exhibit compliance problems similar to those 

where Congress granted a change or exception to the statute in the past. 

Offshore examinations take longer than nonoffshore examinations for IRS 

to develop and examine for reasons such as technical complexity and the 

difficulty of obtaining information from foreign sources, and as a result, 

IRS may not complete assessments of all taxes owed. These problems are 

similar to problems giving rise to other changes and exceptions to the 

statute at both the federal and state levels over the years. These changes 

and exceptions provide precedent for changing the statute for offshore 

examinations. 

Some Offshore 

Examinations Present 

Enforcement 

Problems Similar to 

Those Where 

Congress Granted 

Changes to the 

Statute 

Offshore Enforcement 

Problems Are Similar to 

Those Justifying Past 

Changes to the Statute 

Offshore examinations present IRS with various enforcement problems. 

As discussed above, offshore examinations take longer to develop and 

examine. IRS officials told us that this is due to the examinations’ 

complexity and difficulty in identifying and obtaining information from 

foreign sources. Agents and managers also said that they often choose to 

end an ongoing examination nearing the end of the 3-year assessment 

period without making a complete assessment rather than risk taking the 

examination past the statute period, losing revenue, and facing 

disciplinary actions. Further, agents and managers explained that some 

taxpayers or their representatives employ dilatory, uncooperative tactics 

when dealing with IRS. In addition, we previously testified14 that the use of 

offshore schemes can also pose a threat to the integrity and fairness of our 

tax system by adversely affecting voluntary compliance if honest 

taxpayers believe that significant numbers of individuals are not paying

their fair share of the tax burden. 

We reviewed 12 IRS offshore case files and found examples of 

(1) technical complexity, (2) difficulty in identifying and obtaining 

information from foreign sources, and (3) taxpayers or their 

representatives employing dilatory, uncooperative tactics when dealing 

with IRS. We also found a wide variety of offshore examinations, from 

 14GAO, Internal Revenue Service: Enhanced Efforts to Combat Abusive Tax Schemes—

Challenges Remain, GAO-02-618T (Washington, D.C.: Apr. 11, 2002). 

Page 19 GAO-07-237 Offshore Tax Evasion
very simple examinations to much more complex examinations that had 

been under examination for years. In order to obtain illustrative examples 

of offshore examinations, we reviewed examinations that took a shorter 

than average number of days to complete, about an average number of 

days, and a longer than average number of days. We reviewed case files in

two locations and our reviews included both completed examinations and

examinations still in progress. These examinations included some that had 

no changes to the taxpayer. The two examinations described below 

include one that took a relatively low number of days and one that took a 

longer than average number of days. 

In the first examination, the taxpayer was identified as holding an offshore 

credit card in a country considered to be a tax haven. The taxpayer 

maintained that he did not have an offshore credit card. IRS used a 

summons to obtain records of a domestic rental car transaction that would 

identify the holder of the offshore credit card. While the name shown on 

the rental car records was similar to the taxpayer’s name, it was not the 

taxpayer’s name. After reviewing the rental car records, the revenue agent 

concluded that the taxpayer was not the holder of the offshore credit card. 

The examination had no other issues and resulted in no change in the 

amount of tax owed by the taxpayer. In conducting this examination, the 

revenue agent 

• sent 4 pieces of correspondence to the taxpayer,

• conducted 1 interview with taxpayer,

• notified the taxpayer of third-party contact, and 

• used 1 summons to obtain domestic rental car records; the summons was 

returned 33 days after it was issued. 

In the second examination, the taxpayer had a number of businesses in the 

United States and in other countries, including at least one business in a 

tax haven country. It appeared that some of the taxpayer’s businesses paid 

consulting fees to other businesses the taxpayer owned, and consulting 

fees were paid into an offshore account in a tax haven country through 

which the taxpayer received funds via a credit card. 

IRS found it difficult to determine how much money was in the taxpayer’s

offshore tax haven business and how the money got there. The money in

that business, IRS told us, is the lynchpin of the entire examination, which

was still underway at the time of our review. During the 4 years that the 

examination had been underway, IRS opened examinations on the 

taxpayer’s spouse and on other businesses in other tax years. IRS has not 

been able to find where some of the money is going, although officials are

Page 20 GAO-07-237 Offshore Tax Evasion
confident that more is being hidden as the taxpayer had other businesses 

that made payments to the business in the offshore tax haven country. 

Over the 4 years of this examination, there have been at least 

• 5 powers of attorney, 

• 20 summonses, 

• 39 contacts with the taxpayer’s power of attorney, 

• 23 document requests, 

• 5 missed appointments by taxpayer or taxpayer’s representative, 

• 1 statute extension, 

• 2 interview requests denied, 

• 5 meetings with taxpayer’s representative, 

• 4 postponed appointments, 

• 4 third-party contacts, and 

• 2 occasions on which the taxpayer refused to supply information. 

The scheme began, as far as IRS can tell, in the late-1990s, but 

examinations of some early years of the taxpayer’s scheme were 

statutorily barred. This means that, when the examination eventually

closes, IRS will not be able to assess any additional taxes on at least some 

tax years that IRS agents found the taxpayer was holding money offshore 

unless they determine that fraud was committed. 

Enforcement problems exhibited in the 12 cases we reviewed are similar 

to enforcement problems justifying changes and exceptions to the statute

at both the federal and state levels over the years. For example, the statute 

was recently changed at both the federal and state levels to address 

specific compliance problems, such as dilatory tactics on the part of 

taxpayers and the use of technically complex transactions. The following

details on legislative actions illustrate instances where changes and 

exceptions to the statute were granted at both the federal and state levels 

because of enforcement problems similar to those exhibited by offshore 

examinations such as (1) time constraints on IRS; (2) taxpayers delaying 

examinations through dilatory, uncooperative tactics on the part of 

taxpayers; and (3) failure of taxpayers to provide required information. 

The Revenue Act of 193415 provided the current 3-year statute. In making 

the change in 1934 from 2 to 3 years, the Senate Report noted that 

experience showed that the 2-year period was “too short in a substantial 

Historical Changes and 

Exceptions 

 15Chapter 277, 48 Stat. 683, May 10, 1934. 

Page 21 GAO-07-237 Offshore Tax Evasion
number of large cases, resulting oftentimes in hastily prepared 

determinations, with the result that additional burdens are thrown upon 

taxpayers in contesting ill-advised assessments. In other cases, revenue is

lost by reason of the fact that sufficient time is not allowed for disclosure 

of all the facts.” 

As discussed above, Congress has also provided exceptions to this 3-year 

assessment period. For example, the exception for filing a false or 

fraudulent return dates back to the Revenue Act of 1916.16 Where this 

exception applies, the assessment can be made at any time. Similarly, the 

exception for significant omissions of gross income dates back to the 

Revenue Act of 1934. Where this exception applies, the tax may be 

assessed at any time within 6 years after the return is filed. According to 

the legislative history for the 1934 Act, this provision was added to enlarge 

the scope of the existing exception allowed for false or fraudulent returns 

while limiting the exception where a taxpayer may have made an honest 

mistake and it would be unfair to keep the statute open indefinitely. The 

exception to the statute of limitations for failure to report certain foreign 

transactions dates back to the Taxpayer Relief Act of 1997.17 This 

exception was included and grouped along with certain other changes 

designed to simplify formation and operation of international joint 

ventures. 

More recently, Congress changed the statute to provide IRS with 

additional time to make assessments in the case of unreported listed 

transactions.18 With the American Jobs Creation Act of 2004,19 Congress 

extended the statute for unreported listed transactions for 1 year after the

earlier of (1) the date the information required to be reported is provided 

or (2) a material advisor meets the requirements for providing a list of 

investors in the listed transaction. 

Recent Federal Exception to 

the Statute 

 16Chapter 463, 39 Stat. 756, Sept. 8, 1916.

17Pub. L. No. 105-34, Aug. 5, 1997. 

18Listed transactions are the same as, or substantially similar to, a transaction specifically 

identified by IRS as a tax avoidance transaction. For a transaction to be a listed 

transaction, IRS must issue a notice, regulation, or other form of published guidance 

informing taxpayers of the details of the transaction. IRS listed 31 such transactions as of 

January 2007. 

19Pub. L. No. 108-357, Oct. 22, 2004. 

Page 22 GAO-07-237 Offshore Tax Evasion
Listed transactions are complex transactions that manipulate parts of the 

tax code or regulations and are typically buried among “legitimate” 

transactions reported on tax returns. Because the transactions are often 

composed of many pieces located in several parts of a complex tax return,

they are essentially hidden from plain sight, which contributes to the 

difficulty of determining the scope of the abusive shelter problem. Often 

lacking economic substance or a business purpose other than generating 

tax benefits, abusive shelters are promoted by some tax professionals, 

often in confidence, for significant fees, sometimes with the participation 

of tax-indifferent parties, such as foreign or tax-exempt entities. They may 

involve unnecessary steps and flow-through entities, such as partnerships, 

which make detection of these transactions more difficult. The 

transactions are marketed to wealthy individuals, large corporations, and 

small business taxpayers. Section 6111 of the Internal Revenue Code 

requires the promoter or other tax shelter organizer to report such 

transactions with IRS. Further, Department of the Treasury regulations20

require promoters to maintain lists of investors who have entered into the 

transactions and investors to disclose the transactions into which they 

have entered. 

In a March 2006 report, for example, the Treasury Inspector General for 

Tax Administration (TIGTA) described a type of listed transaction called 

Son of Boss (Bond and Option Sales Strategies).21 According to TIGTA, this 

transaction used flow-through entities, such as partnerships, and various 

financial products to add steps and complexity to transactions that had 

little or no relationship to the investor’s business or the asset sale creating 

the sheltered gain. TIGTA further explained that the losses generated from

the transactions were often reported among “legitimate” items in several 

parts of the tax return. TIGTA concluded that taken together, these 

characteristics, especially the use of flow-through entities, made it very 

difficult for IRS to detect the Son of Boss abusive tax shelter through its 

traditional process of screening returns individually for questionable 

items. TIGTA noted that examinations of abusive tax shelters can take

significant amounts of time even for the most experienced examiners 

because such shelters often involve complex, technical transactions that 

 20Treas. Reg. Sec. 301.6112-1 and Treas. Reg. Sec. 1.6011-4.

21Treasury Inspector General for Tax Administration, The Settlement Initiative for 

Investors in a Variety of Bond and Option Sales Strategies Was Successful and Surfaced

Possible Next Steps for Curtailing Abusive Tax Shelters, 2006-30-065 (Washington, D.C.: 

Mar. 31, 2006). 

Page 23 GAO-07-237 Offshore Tax Evasion
take on different variations and require examining multiple flow-through 

entities to make a proper tax determination. 

At the time of our review, IRS representatives stated that sufficient time 

had not elapsed to determine to what extent, if any, the 1-year extension 

for unreported listed transactions improved examination effectiveness. An 

IRS analyst explained, however, that the 1-year extension resulted in 

increased disclosures of previously undisclosed listed transactions. This 

analyst stated that 35 taxpayers made 74 separate disclosures about 

previously unreported listed transactions and that 8 of these 74 disclosures 

were duplicates. 

At the state level, California recently extended its statute from 4 to 8 years 

for taxpayers that invest in an abusive tax shelter (ATS) transaction. Such

transactions include IRS listed transactions and other schemes of 

particular importance to California. According to the California Legislative 

Analyst’s Office (LAO), the key feature of these transactions is that they 

have no true economic purpose but exist solely for reasons of tax 

avoidance. Among their characteristics is the use of (1) pass-through 

entities such as partnerships, (2) third party facilitators, and (3) offshore 

accounts or facilitators. The LAO further explained that ATS transactions 

can be quite difficult to identify and often even harder to understand, even 

for trained tax auditors.

As with IRS, California experienced increased disclosure as a result of 

extending its assessment period from 4 to 8 years for taxpayers involved in 

ATS transactions. A California FTB manager stated that the newly enacted 

8-year statute had not been applied because most tax shelter examinations

are closed within the normal 4-year period or by requesting voluntary 

waivers. It should be noted that California’s assessment period is 1 year 

longer than the federal 3-year assessment period. The FTB manager also 

cited two sources of examinations in which the normal 4-year statute had 

expired but taxpayers were willing to work to resolve their tax shelter 

issues. These sources were the Self Compliance Letters22 and the 

California Statute Change 

 22During 2005, the California FTB formed several new units to reduce the tax gap. Among

these new units was the Abusive Tax Shelter Unit, which was formed to identify returns 

with abusive tax shelters and to foster self-compliance. According to a California FTB

manager, this unit instituted a new approach to addressing potential participants in abusive 

transactions. Based on disclosure information, investor lists, and tax returns, she explained 

that the unit contacts taxpayers with a self-compliance letter to solicit amended returns 

that reverse the potentially abusive issues. 

Page 24 GAO-07-237 Offshore Tax Evasion
California Tax Shelter Resolution Initiative.23 The California FTB used a 

self compliance letter to solicit amended returns from taxpayers for at 

least 1 year in which the 4-year statute had expired. This letter cited the 8-

year statute. At the time of our review, 13 taxpayers filed amended returns, 

which reported tax and interest of about $2.3 million. Additional penalties 

may apply to these 13 taxpayers. Another 48 taxpayers agreed to file 

amended returns with estimated taxes and penalties of about $7 million. 

Under the California Resolution Initiative, the FTB was accepting 

applications and drafting closing agreements with another 181 taxpayers 

who had at least 1 tax year for which the 4-year statute had either expired 

or was about to expire. 

The justification for extending the statute for unreported listed 

transactions at the federal level and for ATS transactions in California 

generally involved qualitative factors. A House of Representatives Report24

accompanying the American Jobs Creation Act of 2004 states that “some 

taxpayers and their advisors have been employing dilatory tactics and 

failing to cooperate with IRS in an attempt to avoid liability because of the 

expiration of the statute of limitations. The Committee accordingly 

believes that it is appropriate to extend the statute of limitations for 

unreported listed transactions.” 

While not enacted, Senate bill 476 (CARE Act of 2003) included a provision 

similar to the provision of the American Jobs Creation Act of 2004 that 

extended the statute for unreported listed transactions. A Senate Report25

accompanying Senate bill 476 states that “...extending the statute of 

limitations if a taxpayer required to disclose a listed transaction fails to do 

so will afford IRS additional time to discover the transaction if the 

taxpayer does not disclose it.” Similarly, the California LAO stated that the

time extension for ATS transactions will allow the FTB to “more fully 

Legislative Reports Discuss 

Reasons for Change 

 23The California Tax Shelter Resolution Initiative provided analogous tax treatment for

California taxpayers participating in, or intending to participate in, IRS’s Settlement 

Initiative for an array of transactions, including 16 listed transactions and 5 other 

transactions that IRS considered potentially abusive. Taxpayers had until January 23, 2006, 

to submit their settlement applications to IRS. To participate in the California initiative, 

California taxpayers must have participated in the IRS initiative. They had until March 31, 

2006, to file an election to participate in the California initiative. Both the IRS and 

California initiative required payment of taxes owed and interest. Both also provided

penalty waivers and allowed transaction costs such as professional and promoter fees. 

24House Report 108-548—Pt. 1 American Jobs Creation Act of 2004 (June 2004). 

25Senate Report 108-11—CARE Act of 2003 (Feb. 27, 2003). 

Page 25 GAO-07-237 Offshore Tax Evasion
develop cases that represent ATS activity and result in a greater 

sustainment rate at the appeal level.”

In addition to affording more time for IRS to discover undisclosed 

transactions, the Senate report accompanying Senate bill 476 also stated

that “extending the statute of limitations if a taxpayer required to disclose

a listed transaction fails to do so will encourage taxpayers to provide the 

required disclosure....” In analyzing the legislation that extended the 

California assessment period from 4 to 8 years, the California FTB noted 

that “some taxpayers will continue to engage in tax avoidance transactions 

until the risks and costs of engaging in the transactions are significantly 

increased.” 

More generally, tax evasion by some taxpayers can affect the perceptions 

of other compliant taxpayers about the fairness and equity of our tax 

system. In its report accompanying Senate bill 476, the Senate Committee 

on Finance stated that the committee “is aware that individuals and 

corporations are increasingly using sophisticated transactions to avoid or

evade Federal income tax. Such a phenomenon could pose a serious threat 

to the efficacy of the tax system because of both the potential loss of 

revenue and the potential threat to the integrity of the self-assessment 

system.” Similarly, the California LAO concluded that tax avoidance “by 

some taxpayers shifts the relative tax burden towards taxpayers already in 

compliance. This principle of fairness has ramifications for the tax system 

itself. A perception that the tax system is not equitable could result in 

noncompliance and tax avoidance by an increasing proportion of 

taxpayers.” 

The Supreme Court found that statutes of limitations find their 

justification in necessity and convenience. According to a Supreme Court 

opinion, statutes of limitations are practical and pragmatic devices to 

spare the court from litigation of stale claims, and the citizen from being 

put to his defense after memories have faded, witnesses have died or 

disappeared, and evidence has been lost.26 The opinion goes on to say that 

statutes of limitations are by definition arbitrary. Historically, the 

assessment statute of limitations has varied in length. For example, the 

Revenue Act of 191927 set the statute of limitations for tax assessments at 5 

Precedent Exists for 

Changing the Statute for 

Offshore Examinations 

 26Chase Securities Corp. v. Donaldson, 325 U.S. 304, May 21, 1945. 

27The Revenue Act of 1919, ch. 18, 40 Stat. 1057, February 24, 1919. 

Page 26 GAO-07-237 Offshore Tax Evasion
years. The statute was changed to 2 years in 1932.28 The current 3-year 

statute stems from the Revenue Act of 1934.29 As described above, 

Congress granted changes and exceptions to the statute over the years to 

address various types of enforcement problems. Given the similarities 

between the enforcement problems exhibited by offshore examinations 

and the enforcement problems giving rise to past changes and exceptions 

to the statute, precedent exists for changing the statute for offshore 

examinations. 

Changing the statute for offshore examinations would necessitate 

weighing advantages and disadvantages. If Congress wishes to change the

statute for examinations where offshore compliance is the major issue, 

certain design options, such as limiting any examination and possible 

assessment to those issues attributable to offshore transactions or only 

suspending the statute while IRS is waiting for taxpayer responses to IRS 

data requests, might mitigate some of the disadvantages of the statute 

extension. 

Changing the statute for examinations in which offshore transactions are a

major enforcement problem will require weighing both advantages and 

disadvantages. In addition to advantages, such as fairness or deterrence, 

mentioned earlier as justification for extending the statute for unreported 

listed transactions and ATS transactions, interested parties from various 

organizations that represent taxpayers or work with tax issues mentioned 

other advantages and disadvantages for an exception to the statute for 

offshore examinations. For example, they mentioned the ability of IRS to 

look back at several tax years once an offshore scheme is identified as an

advantage of such an exception. On the other hand, they mentioned that 

such an exception would further complicate the tax code by adding 

another provision that would most likely include complicated criteria 

addressing offshore transactions. Table 7 summarizes their views on such 

an exception in general.

Changing the Statute 

Would Necessitate 

Weighing Advantages 

and Disadvantages 

Advantages and 

Disadvantages of Changing 

the Statute 

 28The Revenue Act of 1932, ch. 209, 47 Stat. 169, June 6, 1932. 

29The Revenue Act of 1934, ch. 277, 48 Stat. 683, May 10 1934.

Page 27 GAO-07-237 Offshore Tax Evasion
Table 7: Views of Interested Parties in General on Changing the Statute for Offshore 

Examinations

Advantages Disadvantages

• Increases perceptions of fairness 

• Enhances deterrent effect 

• Allows IRS to look back at several 

tax years once a scheme is 

identified 

• Complicates tax laws by adding complex 

criteria 

• Creates another precedent for future 

exceptions 

• Increases uncertainty and lack of closure 

• Increases recordkeeping costs 

• Increases difficulty of marshalling a defense 

as memories fade and records disappear 

• Duplicates tools already available to IRS (e.g., 

fraud, consent agreements, etc.) 

• Increases IRS focus on old returns, which 

may not be a good use of IRS resources 

• Increases perceptions of unfairness unless 

matched by an extended refund period 

Source: GAO analysis of comments by interested parties from various organizations that represent taxpayers or that work with tax 

issues. These organizations included the American Association of Attorney—Certified Public Accountants, American Bar Association,

American Institute of Certified Public Accountants, National Association of Enrolled Agents, National Association of Tax Professionals, 

National Society of Accountants, National Society of Tax Professionals, and the Department of the Treasury (IRS Small Business/Self

Employed division, Taxpayer Advocate Service, IRS Office of Chief Counsel, and Department of the Treasury Office of Tax Policy). 

In commenting on an exception to the statute for offshore examinations, 

these interested parties also pointed out advantages and disadvantages for 

various design options that could be used to implement such an exception. 

These options relate to (1) the scope of an exception and (2) the way in 

which IRS is afforded additional time to address the enforcement 

problems presented by offshore examinations. Scope refers to (1) which 

taxpayers will be subject to the exception and (2) the extent to which the 

exception allows IRS to examine a tax return. The way in which IRS is 

afforded additional time refers to (1) an extension to the statute, such as 

for an additional 3 years from the filing date of a tax return or (2) a 

suspension of the statute pending resolution of a compliance problem, 

such as slow taxpayer response to IRS records requests. A suspension is 

triggered by a specified event or action. Table 8 presents the views of 

these interested parties on the advantages and disadvantages of these 

design options. 

Page 28 GAO-07-237 Offshore Tax Evasion
Table 8: Views of Interested Parties on Design Options for Changing the Statute for Offshore Examinations

Design option Advantages Disadvantages 

Exception applies to all 

taxpayers having offshore 

accounts/entities 

• Increases simplicity when compared to a 

case-by-case approach 

• Increases certainty when compared to a 

case-by-case approach 

• Includes taxpayers having legitimate reasons for 

offshore accounts/entities 

• Requires clear criteria defining factors such as offshore 

account and offshore entity 

Exception applies on a 

case-by-case basis 

• Exempts taxpayers having legitimate 

reasons for offshore accounts/entities 

• Requires clear criteria defining applicability 

• Requires safeguards to prevent unwarranted

application 

• Uncertainty for taxpayers as to whether they are 

covered 

Exception applies to entire 

tax return 

• Maximizes potential for assessment • Expands examination beyond offshore issues

• Creates perceptions of unfairness 

Exception applies to 

offshore issues only 

• Limits examination to offshore issues • Requires safeguards to prevent scope expansion to 

nonoffshore issues 

Exception in the form of a 

statute extension 

• Increases time to identify participants 

• Increases time to develop examination 

• Increases time for examination 

• May ineffectively identify offshore scheme participants 

• Fails to guarantee information needed for assessment 

will be provided within the extended time 

Exception in the form of a 

statute suspension 

• Focuses on a specific problem

• Increases time to address a specific 

problem 

• Requires clear criteria for triggering event 

• Requires triggering event to occur before additional 

time allowed 

Source: GAO analysis of comments by interested parties from various organizations that represent taxpayers or that work with tax 

issues. These organizations included the American Association of Attorney—Certified Public Accountants, American Bar Association,

American Institute of Certified Public Accountants, National Association of Enrolled Agents, National Association of Tax Professionals, 

National Society of Accountants, National Society of Tax Professionals, and the Department of the Treasury (IRS Small Business/Self

Employed division, Taxpayer Advocate Service, IRS Office of Chief Counsel, and Department of the Treasury Office of Tax Policy). 

If Congress wishes to change the statute for examinations where offshore 

compliance is a compliance problem, several of the design options 

mentioned by interested parties might mitigate some of the disadvantages 

of a statute exception for such examinations. To help clarify their 

suggestions, we also developed some hypothetical examples to illustrate 

their points. Specific suggestions that we heard included the following: 

• Making an exception apply to all taxpayers having offshore 

accounts/entities may mitigate concerns about taxpayer uncertainty and

lack of closure. 

• Limiting any examination and possible assessment only to those issues 

attributable to offshore transactions might mitigate concerns about 

unfairly exposing taxpayers to open-ended IRS examinations or “fishing 

expeditions” that could result in assessments for issues unrelated to 

offshore transactions. For example, an examination triggered by a 

taxpayer possessing an offshore credit card could enable the IRS to 

examine depreciation expense for the plant and equipment used in the 

taxpayer’s domestic business, which the taxpayer might perceive as unfair.

Page 29 GAO-07-237 Offshore Tax Evasion
• Suspending the statute until a specific issue is resolved, such as taxpayers 

not responding promptly to IRS requests for records, might mitigate 

concerns about an across-the-board extension of the 3-year assessment 

period. 

• Specifying a length of time for an initial extension, such as 1 year, and 

requiring a court or review board’s approval for any subsequent 

extensions might also mitigate taxpayer concerns about potential IRS 

abuse of an exception to the statute for offshore examinations. This option 

might allay concerns about unwarranted application by IRS of a case-bycase exception to the statute. 

• Establishing a materiality test might mitigate concerns that IRS would 

focus on taxpayers having insignificant issues. This test could be, for 

example, (1) any amount greater than a percentage of a specific amount 

shown on a tax return such as 20 percent of total assets for taxpayers 

operating a business or (2) any amount greater than an absolute dollar 

amount such as any amount greater than $10,000. This option might allay 

concerns about including all taxpayers, particularly those having 

legitimate offshore transactions that are not substantial in value. 

• Limiting the exception to a case-by-case approach might mitigate concerns 

about taxpayers being unfairly subjected to an extended assessment 

period when they have legitimate offshore transactions. For example, an 

exception to the statute could be limited to taxpayers identified on client 

lists of known promoters of offshore schemes. This option might allay 

concerns about including all taxpayers, particularly those having 

legitimate reasons for offshore transactions. 

• Maintaining symmetry between the statute for assessments and the statute 

for refunds by matching any exception to the statute for assessments with 

the same exception to the statute for refunds might mitigate taxpayer 

concerns about the unfairness or one-sidedness of an exception to the 

statute for assessments. If the statute was suspended until taxpayers 

respond to IRS request for records, for example, the statute for refunds 

should also be suspended until the taxpayers respond to the request. 

• Assuring access to IRS appeals procedures and to the Tax Court might 

mitigate taxpayers’ concerns about the potential for IRS abuse as well as 

provide due process should they decide to challenge IRS’s use of such an

exception to the statute. For example, procedures requiring TIGTA to 

investigate any taxpayer allegations of denial of due process could be 

mandated. 

As with all forms of tax evasion, it is important that IRS pursue offshore 

tax evasion because it adds to the tax gap, increases the tax burden on 

honest taxpayers, and poses a threat to the integrity and fairness of our tax 

system by adversely affecting voluntary compliance when honest 

Conclusions 

Page 30 GAO-07-237 Offshore Tax Evasion
taxpayers come to believe that other people are getting away with not 

paying their fair share. Offshore tax evasion is special, though, in that the 

examinations that IRS pursues typically take much longer to develop and 

examine because of the inherent difficulty in identifying and obtaining 

information from foreign sources, the often dilatory and uncooperative 

tactics on the part of taxpayers and their representatives, and the technical

complexity of the examinations. 

Nevertheless, the statute of limitations that applies to offshore 

examinations is the same as applies to all returns. This leads to some 

suspected tax evasion that IRS identifies going unexamined when revenue

agents and managers choose not to start work on offshore examinations 

because there is too little time remaining under the statute or choose to 

cut work off early in order to avoid a barred statute. There are exceptions 

that permit IRS to continue examinations past the 3-year point and still 

make assessments, but in many offshore examinations IRS has only 3 

years to complete its work. Furthermore, taking an examination past the 3-

year point in anticipation of finding fraud or one of the other exceptions 

permitted under the statute represents a gamble by IRS that the 

investment of additional examination resources will ultimately result in an 

assessment being allowed under the law. 

Past Congresses have recognized the need for statute exceptions in the 

face of similar compliance and enforcement obstacles. In the case of the

statute exception for unreported listed transactions, Congress delegated to

IRS the responsibility for defining the specific circumstances triggering the 

exception. A statute exception for offshore examinations that balances the

additional layers of difficulty for IRS in detecting and examining offshore 

cases with fairness to taxpayers involved in legitimate offshore financial

activity would strengthen IRS’s efforts to combat offshore tax evasion. 

Additional time to complete examinations would give IRS greater 

flexibility in choosing which examinations to open and when to close 

them. This would likely lead to fewer examinations where revenue agents 

abandon the pursuit of apparent noncompliance simply because they are 

running out of time. 

In order to provide IRS with additional flexibility in combating offshore 

tax evasion schemes, Congress should make an exception to the 3-year 

civil statute of limitations assessment period for taxpayers involved in 

offshore financial activity. Similar to Congress’s approach to unreported 

listed transactions, Congress may wish to establish a process wherein IRS 

Matter for 

Congressional 

Consideration 

Page 31 GAO-07-237 Offshore Tax Evasion
would identify the types of offshore activity to which a statute exception 

would apply. 

We received e-mail and oral comments from IRS’s SB/SE division and the

IRS General Counsel’s office about a draft of this report. The officials 

making comments noted that a longer statute for offshore examinations 

makes sense and should enhance compliance. They also discussed how 

the offshore-to-nonoffshore comparisons in the draft of this report were 

typically made for all types of examinations, rather than only of field 

examinations. They observed that field examinations are by far the most 

common type of examination used for offshore tax evasion cases and 

suggested that a comparison of just field examinations would also be 

useful to the reader. We agreed and we changed our discussion of 

offshore-to-nonoffshore examinations to include comparisons both of all 

types of examinations collectively and field examinations alone. Also in 

their comments, IRS officials clarified other technical and legal issues, 

which we incorporated in this report where appropriate. 

As agreed with your offices, unless you publicly announce its contents 

earlier, we plan no further distribution of this report until 30 days from its 

issue date. At that time, we will send copies to the Chairman and Ranking 

Member, House Committee on Ways and Means; the Secretary of the 

Treasury; the Commissioner of Internal Revenue; and other interested 

parties. Copies will be made available to others upon request. This report 

will also be available at no charge on GAO’s Web site at 

http://www.gao.gov. 

If you or your staff have any questions, please contact me at (202) 512-9110

or brostekm@gao.gov. Contact points for our Offices of Congressional 

Relations and Public Affairs may be found on the last page of this report. 

Key contributors to this report are listed in appendix II. 

Michael Brostek 

Director, Tax Issues 

Strategic Issues Team 

Agency Comments 

and Our Evaluation 

Page 32 GAO-07-237 Offshore Tax Evasion
Appendix I: Objectives, Scope, and Appendix I: Objectives, Scope, and Methodology 

Methodology 

The objectives of this report were to (1) compare the length of and 

recommended assessments yielded by offshore and nonoffshore 

examinations and determine the effect of the 3-year statute of limitations 

on recommended offshore assessments, (2) determine whether or not 

enforcement problems posed by offshore examinations are similar to 

those where Congress has previously granted an exception to the statute,

and (3) identify possible advantages and disadvantages of an exception to

the statute for offshore examinations. 

To compare the length of and recommended assessments yielded by 

offshore and non-offshore examination cases and determine the effect of 

the statute of limitations on offshore assessments, we examined the 

Internal Revenue Service (IRS) Audit Information Management System 

Reference (AIMS) database, which holds all IRS’s data about completed 

examinations. The database included a variety of taxpayers, including 

individuals, businesses, and corporations, including large corporations. We 

analyzed fiscal years 2002 through 2005, the most recent years for which 

IRS had data at the time of our evaluation. We grouped all examinations 

maintained in the AIMS database by whether they were offshore 

examinations (as determined by the project code under which all 

examinations are categorized) or not offshore examinations. We found 

that there were both offshore and nonoffshore examinations represented 

among all of the types of taxpayers in AIMS with the exception of excise 

tax examinations, which were only found in the nonoffshore subset. We 

used the AIMS data to analyze the number of days cases spent in both 

development and examination and the recommended assessments from 

both offshore and nonoffshore examinations. We further subdivided the 

data to compare only field examinations, because these were the most 

common type of offshore examination. To assess the reliability of the 

AIMS data, we reviewed AIMS documentation, and conducted electronic 

testing of key variables. Based on this work, we determined that the AIMS 

data were sufficiently reliable for our purposes. 

We spoke with 17 IRS revenue agents and managers with expertise in the 

offshore area about their experience in conducting and closing offshore 

examinations. We also examined 12 offshore examination case files to gain 

an understanding of the circumstances that IRS revenue agents face in 

dealing with noncompliant taxpayers. We spoke with IRS representatives 

to gain an understanding of how cases are identified for examination, and 

to determine the process by which an offshore case is developed and 

examined. In addition, we reviewed various IRS documents related to the 

statute of limitations on assessments, including exceptions to the statute. 

Page 33 GAO-07-237 Offshore Tax Evasion
Appendix I: Objectives, Scope, and 

Methodology 

To determine whether or not enforcement problems posed by offshore 

cases are similar to those where Congress granted an exception to the 

statute in the past, we identified enforcement problems posed by offshore 

examinations. To do so, we examined IRS’s AIMS database, examined case 

files and spoke with IRS representatives. We also identified enforcement 

problems where Congress granted an exception to the statute in the past. 

To do so, we researched the history of the federal statute of limitations for 

assessments. We also reviewed legislation proposed between 2003 and 

2006 that included references to either offshore tax evasion or the statute 

of limitations. This included the American Jobs Creation Act of 2006 and 

other legislative proposals related to the statute. In addition, we reviewed 

reports prepared by the Treasury Inspector General for Tax 

Administration and California state agencies related to tax avoidance 

issues and the statute. We supplemented these reviews with discussions 

with representatives of the California Franchise Tax Board. 

To identify advantages and disadvantages of granting an exception to the

statute for offshore examinations, we interviewed representatives of 

various organizations to obtain views on mandating an exception to the 

statute for offshore examinations. Such an exception would afford IRS 

more time to develop and examine offshore examinations. These 

organizations included the American Association of Attorney—Certified 

Public Accountants, American Bar Association, American Institute of 

Certified Public Accountants, National Association of Enrolled Agents, 

National Association of Tax Professionals, National Society of

Accountants, and National Society of Tax Professionals. We also 

interviewed representatives of various organizations within the 

Department of the Treasury to obtain their views. These organizations 

included the IRS Small Business/Self Employed division, the Taxpayer 

Advocate Service, the IRS Office of Chief Counsel, and the Department of 

the Treasury Office of Tax Policy. 

Page 34 GAO-07-237 Offshore Tax Evasion
Appendix II: 

A

GAO Contact and Staff 

cknowledgments 

Page 35 GAO-07-237 

Appendix II: GAO Contact and Staff 

Acknowledgments 

Michael Brostek, (202) 512-9110 or brostekm@gao.gov

In addition to the contact named above, David Lewis, Assistant Director; 

Perry Datwyler; Evan Gilman; Shirley Jones; John Mingus; and Jeff 

Schmerling made key contributions to this report. 

GAO Contact 

Acknowledgments 

(450367) Offshore Tax Evasion
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