the inspector general smells something fishy.
by 卡塔尔世界杯常规比赛时间 research
believe it not, there are large american corporations that establish a pseudo-presence in other countries for the sole purpose of evading taxes.
and that’s not the only trick in the corporate books.
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granted, sometimes those tricks are legitimate tax tactics. the tax code has loopholes, and that’s what they’re for.
needless to say, corporate tax strategy can get pretty complicated. there is an entire industry of lawyers, accountants and wealth management professionals dedicated to walking the fine line between evasion and due diligence in the interest of shareholders.
and it’s up to the large business and international (lb&i) division of the internal revenue service to examine those practices and figure out what’s legal, what’s not.
that process gets complicated, too, and whistleblowers within the irs are expressing concerns about the agency’s ability to affectively address large multinational corporations. it’s been a quiet brouhaha but loud enough to catch the intention of the treasury inspector general of tax administration.
the irs gets audited
tigta launched an audit. (yes, even the irs gets audited.) the issue wasn’t whether certain corporations were evading taxes but whether the lb&i’s processes, procedures and enforcement tools were up to the job and being appropriately applied.
to evaluate the policies and procedures, tigta was given a list of 23 multinational corporations that were alleged to have used a foreign trust structure that had no alleged business purpose or economic substance other than than to dodge u.s. taxation.
the auditors looked at not only foreign trust structures but a few other suspicious privileges that large corporations seem to have.
- they can directly contact irs executives.
- they may not be suitable for the compliance assurance program (cap).
- lb&i compliance personnel are limited in their ability to communicate and interact during the appeals process.
(the cap allows qualifying entities to collaborate with the irs by self-identifying potential tax issues. with proper and well documented procedures, entities can be removed from the program if they are inadequately transparent or cooperative.)
who is solving the problems?
irs examinations of large multinational corporations get very complex, frequently involving lb&i executives, senior revenue agents, specialists and irs counsel. in some cases, suspicions about foreign trusts devolved into investigations of transfer pricing – intercompany transactions at unrealistic prices with no purpose other than to move money among tax jurisdictions.
one problem the irs has to deal with is finding and retaining specialists with knowledge of the country’s myriad industries and the intricacies of transnational pricing.
lb&i is also grappling with the question of when to have irs counsel present in conferences with corporate taxpayers. in these conferences, every irs decision and statement runs the risk of becoming a precedent for similar cases in the future. irs employees provided tigta with several instances where counsel presence proved essential.
as an indication of the precedence problem, key parts of tigta’s audit report are redacted. in one frustrating instance, a sentence begins with “as part of the concerns by an irs employee,” but is then redacted for more than a page.
many problems, two recommendations
the tigta audit report identifies numerous problems with
- investigation procedures,
- assessment of foreign trust structures,
- application of the economic substance doctrine to assess such structures and transfer pricing,
- involving irs counsel in appeals procedures,
- corporations contacting irs executives who subsequently influence examination efforts and
- allowing corporate taxpayers to remain in the cap despite reasons to remove them.
tigta concluded its report with two broad-reaching recommendations.
recommendation 1: the lb&i division should review its procedures to determine whether changes are needed to support effective tax administration, including the use of the economic substance doctrine.
recommendation 2: the irs independent office of appeals should update policies to require inviting irs counsel and compliance personnel to taxpayer conferences.
one response to “is the irs adequately tracking corporate tax evasion?”
roger rotolante
the irs should outsource its audits. they do not have the adequate staffing and the training to audit small domestic corporations.
i can imagine the problems they will have with large corporations and foreigners. they can’t even answer the phone timely and correctly. dei to the government alphabet soup!!