U.S. Sen. Carl Levin (D-Mich.) has been running a multi-year investigation into offshore tax havens, highlighting the methods some U.S. taxpayers use to avoid paying taxes. Now he wants the Internal Revenue Service to do more by requesting additional information from foreign governments.
Levin’s comments are based on a report by the Government Accountability Office released today. At Levin’s request, the office looked into the IRS’s interaction with foreign governments and found that, while the U.S. government has agreements in place to exchange tax information with 90 jurisdictions, IRS officials aren’t as thorough as they could be in monitoring how useful the sharing is.
The report also found that between 2006 and 2010, the U.S. government received almost five times more requests for information than it made. There were 894 outgoing requests during that period — a number that Levin, the chairman of the Senate’s Permanent Subcommittee on Investigations, said could be higher.
“I don’t know if the IRS has been hardened by a historical lack of cooperation from other countries, but it needs to either rev up its requests or revamp our tax treaty network to get more taxpayer information and make more headway against rampant offshore tax abuse that disadvantages honest taxpayers,” Levin said in a statement.
The IRS and the U.S. Department of Justice have been actively pursuing cases of unreported income kept in hidden offshore accounts, with consequences for individuals and major banks. Two years ago, UBS AG, Switzerland’s largest bank, agreed to pay $780 million in fines, penalties, interest, and restitution for helping American customers evade taxes.
Steven Miller, a deputy IRS commissioner for enforcement, wrote a response to the GAO report saying the IRS wants to do better measuring the performance of its information-sharing program. The IRS also gets information through “automatic” sharing with some countries, meaning that no special request is needed.
Sen. Tom Coburn (R-Okla.), the top Republican on the investigative subcommittee, stopped short of criticizing the IRS but praised the GAO’s new report. “Congress has never had information of this type and breadth on tax treaties, which is vitally important to help us make decisions,” he said in a statement. The report, available here, was completed last month and released today.
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