The scheme involves hundreds of taxpayers and tens of millions of dollars in improper deductions and unreported income from retirement account withdrawals. U.S. and Canadian promoters have been marketing the scheme on both sides of the border to individual investors, ranging from middle to high-income individuals.

Leaders of the IRS and CRA said the collaborative effort reflects the progress being taken by the Joint International Tax Shelter Information Centre (JITSIC), a task force formed in 2004 between Australia, Canada, the United Kingdom and the United States to increase collaboration and coordinate information about abusive tax transactions. Delegates from each of the four countries work together in Washington, DC.

"The real time exchange of information, including the identities of promoters and hundreds of investors has been critical to this investigation," said IRS Commissioner Mark Everson. "JITSIC is emerging as an important part of efforts to combat abusive schemes."

Under the scheme, investors purchased what appear to be high-yield offshore investments through offshore corporations and foreign bank accounts. Typically, investors make these purchases using cash or proceeds from withdrawals, allegedly tax free, of retirement funds. Investors also make purchases through using tax refunds improperly generated by alleged losses claimed for natural resource industry investments.

IRS and CRA agents continue to identify promoters, participants and entities involved in the scheme. Promoters and participants engaged in abusive schemes have routinely been subjected to strict enforcement action by both tax administrations.