Recently, the IRS announced that the United States, Australia and the United Kingdom tax administration made public their plan to share tax information involving a multitude of trusts and companies holding assets on behalf of residents in jurisdictions throughout the world.

The IRS went on to state that each nation has acquired a substantial amount of data that reveals the extensive use of such entities organized in a number of jurisdictions including Singapore, the British Virgin Islands, Cayman Islands and the Cook Islands.  Furthermore, this data is not limited to individual owner identities. It also includes the identities of advisors who helped to establish the entity structure.

The combined efforts of the IRS, Australian Tax Office and HM Revenue & Customs brought to light that this could hold weight with tax administrations of other jurisdictions as well. As a result, they have set in motion a plan to share this data and preliminary analysis with other tax administrations.

IRS Acting Commissioner Steven T. Miller is quoted as saying, "This is part of a wider effort by the IRS and other tax administrations to pursue international tax evasion."

Gray, Gray & Gray urges our clients to follow the advice of the IRS and take heed of their warning: U.S. taxpayers holding assets through offshore entities should review their tax obligations with respect to these holdings, seek professional advice, and participate in the IRS Offshore Voluntary Disclosure Program where appropriate. Failure to do so may result in significant penalties and possibly criminal prosecution.

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