Vowing to crack down on Ecuadorians who don’t pay their taxes, the Internal Revenue Service has requested details on 50,000 foreign bank accounts in 42 countries. The request was made to the Global Forum, a coalition of tax and banking authorities in 160 countries, including all G20 countries.
Although Ecuador joined the Forum in 2018, this is the first time it has requested information about specific accounts.
Following several months of investigation, officials at Ecuador’s IRS say many of the bank accounts in question have not been reported on tax returns. “Historically, many foreign accounts held by Ecuadorians have gone reported or under-reported to the IRS,” says IRS spokesman Carlos Ramos. “By some estimates, the country loses as much as $3 billion annually in taxes because of under-reporting of these accounts.”
He added that in the past, the IRS has been reluctant to pursue information on foreign accounts because many of the account-holders were wealthy and wielded political influence. “Our current position is that no one is above the law and that all citizens who owe taxes should pay them. Fortunately, the Global Forum now gives us access to information we did not previously have.”
The Global Forum was formed following scandals involving revelations of unreported taxable income in foreign accounts. The Forum says “hundreds of billions of dollars” are shielded annually in off-shore accounts, depriving governments of needed income.
“As the world has become increasingly globalized, it has also become increasingly popular for taxpayers to move their financial activities across the world. While this has brought great benefits to the banking industry, it has also provided the opportunity for some taxpayers to hide their financial affairs from tax authorities,” the Global Forum says on its website. “By sharing information between banks and tax authorities it is our goal to reduce tax evasion.”