IRS to Target Non-Compliers
March 1st, 2009
Barack Obama has made good on his promise to crack down on corporate tax avoidance by proposing in his budget for 2010 a tough new enforcement campaign directed at taxes owed both domestically and abroad.
The budget . . . includes an increase in funding for the IRS as the new administration sets about closing all those loopholes that it believes allow multinationals to play fast and loose with the US tax code and deplete the Treasury’s coffers.
“The scope, complexity, and sheer magnitude of the international financial system pose significant enforcement challenges for the IRS in carrying out its tax administration responsibilities,” the budget summary document notes.
“The 2010 Budget includes funding for a robust portfolio of IRS international tax compliance initiatives, and sustains and improves IRS efforts to narrow the annual tax gap of over USD300bn,” the summary adds.
Last December, Internal Revenue Service Commissioner Doug Shulman warned that the agency is ratcheting up its efforts to police the US international tax system and focusing its compliance efforts in three main areas, including transfer pricing, withholding taxes and hybrid entities.
Speaking at a tax conference on the eve of the President’s budget announcement, Shulman reiterated that the IRS will pursue international tax avoidance and evasion, particularly of the offshore variety, with a renewed vigour.
“That pressure will continue under my watch,” he told a gathering of international tax practitioners at the Tax Council Policy Institute conference.
Make no mistake about it, Obama’s trillion dollar bailout means that the IRS is not only going to redouble its efforts to close the international tax gap but it will attempt to close the domestic tax gap as well by more vigorously pursuing non-filers, taxpayers who have filed fraudulent or inaccurate returns and those owing back taxes, interest and penalties.
Our Advice: If you owe the IRS back taxes, have not filed your tax returns or have not reported income you earned abroad, we recommend that you hire a tax professional and try to rectify the situation now, voluntarily, before the IRS finds you.
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