The IRS warns Americans: Fess up before we read the Panama Papers

You’ve been warned.
You’ve been warned.
Image: Reuters/Jonathan Ernst
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If you’ve done any dodgy dealings with a Panamanian law firm, you might want to consider coming clean: US tax officials are trying to figure out how to use the Panama Papers in their investigations, and have advised Americans to disclose their offshore accounts before they are discovered by the government.

NBC reports that Internal Revenue Service and Treasury representatives met with their counterparts from around the world last week to discuss cooperation in the aftermath of the disclosures of the vast trove of leaked documents that detail global tax dodging.

“People hiding assets offshore should recognize the continued changes and progress in the international tax arena,” the IRS said in a statement to NBC. “More than ever, their best option remains to come forward voluntarily and participate in the IRS Offshore Voluntary Disclosure Program.”

Although the documents, leaked from the Panamian law firm Mossack Fonseca, hasn’t yet revealed explosive information about US citizens or companies, the papers reportedly contain information that could implicate many Americans. So far, we know that the International Consortium of Investigative Journalists, who reported the revelations, has identified 211 people with US addresses, but that’s just from a small part of the data.

Why no big American names so far? Americans hide billions of dollars (estimates vary) in offshore accounts every year, but not necessarily in Panama–they tend to favor the Cayman Islands, Singapore or Bermuda, according to Politico.  What’s more, they don’t need exotic tax havens, when they can create shell companies in their own country.