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The Daily

IRS: We're Reading the Panama Papers

Chris Gaetano
Published Date:
Apr 18, 2016
irs_hpThe IRS is encouraging people to come clean if they're using a shell company to hide assets, as the service is combing through the Panama Papers looking for tax scofflaws, according to NBC News. The recent leak revealed that a Panamanian law firm has set up hundreds of thousands of shell companies on behalf of world leaders, captains of industry, and even criminal syndicates. While many were created for legitimate business purposes, many others have been used for things such as tax evasion, money laundering, or circumventing anti-corruption controls. 

The revelations within the 11.5 million documents have already caused the Prime Minister of Iceland to step down after the leak revealed he owned debt from the same banks he negotiated with during the financial crisis. The information has also caused trouble for U.K. Prime Minister David Cameron, who admitted that he profited from his father's offshore trust. Ukrainian President Petro Poroshenko is also under fire after the leak revealed he still controlled the chocolate business he swore he'd give up once he came into office. 

The IRS is working with its international counterparts to come up with a coordinated response to the Panama Papers, said NBC, having met with tax authorities from 40 different countries on Wednesday to discuss the matter. Much of the talk centered around how they're going to process all the data, weighing in at 2.6 terabytes, and share it among themselves. 

In the meanwhile, the IRS urged people who may have used a Panamanian shell company to avoid taxes to make use of the service's Offshore Voluntary Disclosure Program. While the program does involve some penalties, such as payment of back taxes owed, they're not as severe than if the IRS finds a tax cheat themselves.