Tax Whistleblower Blog

Obama Administration Increases Efforts to Pursue International Tax Enforcement

The IRS has ramped up its efforts in international tax enforcement under the Obama Administration.  The President and the Commissioner of the IRS, Doug Schullman, have declared that enforcement of international taxation matters will be a priority in the next several years, including using tax informants and tax whistleblowers.  As stated in a previous blog, IRS officials announced a expansion by some 800 international revenue agents.

For years, the IRS strongly indicated the need for defending the U.S. tax base from corporate inversions and transfer pricing issues.  This need has been accentuated by the current predominance of foreign-initiated adjustments.  The first step is the significant expansion of the IRS examination capacity in international tax matters, which in due course will begin to address the imbalance in the source of adjustments.  A second step will be the enforcement of treaty provisions with foreign countries and the redrafting of weak treaty provisions to allow for greater access to foreign testimony and documentation. Finally, the IRS has indicated that where there are problems in resolving issues with treaty partners, it may have to address the level of foreign tax credit relief to be provided to U.S.-based multinationals in such contexts.

In other words, the IRS has declared its intention to provide a heightened focus on international taxation issues, inbound and outbound, including transfer pricing.  International tax whistleblowers will be a welcomed addition to the IRS arsenal to be used to combat international tax evasion.