Department of the Treasury

Revenue Enhancement

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BSA Examiners look at check cashiers, wire services, money order sales,and precious metals. During these Exams it is common to find money that is being laundered and not taxed. The most common meathod is by cashing business checks at a check cashier and then getting cash payouts. The amount of diverted income can be quite large one exam uncovered over $2,000,000 at one location. The money trail is easy to follow since each person cashing a check needs to establish thier identification and copies of all the checks are at a bank. There is no centralized audit trail for checks cashed under $10,000 so these transactions are under the radar. When a BSA Examiner finds this type of activity they report their findings. Very few of the reports are sent for an Income Tax Exam. The efforts of the Revenue Agents are used to support the "Work Plan" managers at all levels are judged by thier support of the "Plan". This "Plan" does not allow very many of the files dealing with the cash that is diverted by cashing checks or any other methods. These transactions could be a cover for a shell corp or unreported income from a business. The "Plan" should be adjusted to include more of these questionable transactions. This is Tax Fraud in the classic sence. People working for wages are the most compliant group and for a small businsses it is very easy to divert income. The highest number of these referrals need to be examined so that the taxes due from these transactions will be collected. If these transaction were put into the work being done by the IRS Examination Division it would cause a ripple effect as others that were thinking about diverting income would quickly realise that they will have to answer for their mis-deeds and will report thier income as required by law.There are a large number of BSA Examiners working to detect money laundering and other efforts to harm this country and they would uncover a great deal of this unsavory activity. Putting these individuals on notice and collecting the Tax and Penalities will help the country meet it's financial needs. BSA provides a clear paper trail that can not be disputed showing how much was diverted. The country needs this huge source of revenue that will not be a burden for anyone else.

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Idea No. 18885