Taxing Hidden Wealth: The Consequences of U.S. Enforcement Initiatives on Evasive Foreign Accounts

Niels Johannesen, Patrick Langetieg, Daniel Reck, Max Risch, Joel Slemrod

NBER Working Paper No. 24366
Issued in March 2018
NBER Program(s):Public Economics

In 2008, the IRS initiated efforts to curb the use of offshore accounts to evade taxes. This paper uses administrative microdata to examine the impact of the enforcement efforts on taxpayers’ reporting of offshore accounts and income. Enforcement caused approximately 60,000 individuals to disclose offshore accounts with a combined value of around $120 billion. Most disclosures happened outside offshore voluntary disclosure programs by individuals who never admitted prior noncompliance. The disclosed accounts were concentrated in countries whose institutions facilitate tax evasion. The enforcement-driven disclosures increased annual reported capital income by $2.5-$4 billion corresponding to $0.7-$1.0 billion in additional tax revenue.

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Document Object Identifier (DOI): 10.3386/w24366

Published: Niels Johannesen & Patrick Langetieg & Daniel Reck & Max Risch & Joel Slemrod, 2020. "Taxing Hidden Wealth: The Consequences of US Enforcement Initiatives on Evasive Foreign Accounts," American Economic Journal: Economic Policy, vol 12(3), pages 312-346. citation courtesy of