Tax evasion has become a growth industry over the past few years, according to experts. Among the biggest scams are trusts set up to shift the unreported earnings of wealthy taxpayers into offshore accounts, supposedly off the IRS radar. Such schemes are openly advertised in publications and on the Internet. IRS agents have answered some of those ads and tracked down illegal schemes. From zero successful prosecutions and convictions for this kind of tax evasion in 1996, the IRS had 52 in 2000, and it anticipates even more this year.
Tougher enforcement bolsters the honest taxpayer's faith that the system is fairly administered.
But Congress and the IRS both know that the proliferation of tax-evasion schemes rises with the complexity of the tax code. Having a federal income tax code that's 15,100 pages only invites sophisticated cheating. It was intended to aid farm cooperatives. But it has been turned into a tax shelter for the wealthy. The code is packed with credits, exemptions, and other complicating items.