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Treasury
Inspector General for Tax Administration |
A COMBINATION
OF LEGISLATIVE ACTIONS AND INCREASED IRS CAPABILITY AND CAPACITY ARE REQUIRED
TO REDUCE THE MULTI-BILLION DOLLAR U.S. INTERNATIONAL TAX GAP Issued on
January 27, 2009 WHAT
TIGTA FOUND TIGTA found that the IRS has not developed an
accurate and reliable estimate of the international tax gap. Non-IRS estimates of the international tax
gap range from $40 billion to $123 billion, but are based on
educated guesses rather than direct measurement. The IRS estimated that the entire tax gap
for Tax Year 2001 was $345 billion.
However, it is doubtful that the IRS’ tax gap estimate includes the
entire international tax gap because identifying hidden income within
international activity is very difficult and time-consuming. The IRS has no plans to comprehensively measure the
international tax gap due to cost, staffing and technical limitations that
make direct measurement unfeasible.
Consequently, there is less certainty that international tax compliance
resources are efficiently allocated to address noncompliance. Nevertheless, over the past few years the IRS has
taken action to better coordinate international tax compliance issues. First in September 2007, the Service-wide
Approach to International Tax Administration was announced. Next, the IRS Commissioner announced that
international issues are a top priority during his tenure. Finally, additional changes were made by modifying
organizational structures, changing processes to facilitate improving
compliance, investing in human capital and information technology and
increasing cooperation and outreach to foreign governments. Beyond the IRS, legislation has been introduced to
address tax haven abuse. Additionally,
the Senate Finance Committee and the Senate’s Permanent Subcommittee on
Investigations both held hearing in July 2008 advocating more tools for
the IRS to combat offshore evasion. READ THE
FULL REPORT To view the report,
including the scope, methodology, and full IRS response, go to: http://www.treas.gov/tigta/iereports/2009reports/2009IER001fr.html. Email Address: inquiries@tigta.treas.gov Phone
Number: 202-622-6500 Web Site: http://www.tigta.gov |
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Inspections
and Evaluations |
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Highlights Highlights of Report Number:
2009-IE-R001 to the Internal Revenue Service Commissioner. WHY TIGTA DID THIS STUDY This project was initiated to evaluate the accuracy and
reliability of estimates of the size of the WHAT TIGTA
RECOMMENDED TIGTA
made no recommendations in this report.
IMPACT ON TAXPAYERS The international tax gap is defined as taxes owed—but not
collected on time—from a |