Washington, D.C. - IRS Commissioner Douglas Shulman saidthe agency would focus more of its efforts on closely scrutinizing transferpricing arrangements that allow U.S. companies to avoid taxes on income earnedabroad, as well as conduct joint audits with tax authorities in othercountries.
"We have been exploring the transfer pricing areafor some time and determined we needed to change the way we do business in thisarea," said Shulman, speaking at George Washington University. "Froma taxpayer's perspective, it seemed that all too often we were taking too longto resolve transfer pricing issues ... that it was difficult for the taxpayeror representative to know who at the service was responsible for resolving theissue ... and that we were not always consistent in our resolution of theseissues."
Shulman said the IRS is establishing a Transfer PricingPractice within its Large and Mid-Size Business Division in order tostrategically administer transfer pricing issues. "The idea here is tocreate a group of experts in the transfer pricing area that we can use tocoordinate our handling of the most important issues to taxpayers and to us,identify emerging issues and trends, and provide consistency in outcomes in ourtransfer pricing cases," he said.
The group will help IRS examination personnel by providingtechnical expertise, assist in the development of new risk assessmenttechniques to better identify the taxpayers and issues with the greatest risk,and develop best practices to ensure optimal resource allocation forexaminations.
Shulman also referred to the agreement with Swissauthorities to turn over the identities of thousands of account holders in theSwiss bank UBS, as well as the voluntary disclosures made by 14,700 taxpayersof their foreign bank account holdings.
"We will be mining the 14,700 voluntary disclosuresfor information to identify financial institutions, advisors and others whopromoted or otherwise facilitated U.S. persons hiding assets and incomeoffshore and attempted to shirk their tax responsibilities at home," hesaid.
Shulman said the IRS is elevating the importance of itstreaty administration and international cooperation. "We want to bothexpand our treaty staff and explore options for industry specialization,"he said. "And we want to look toward expanding our tax attaché program. Weare also working on a protocol to conduct joint audits with some of our treatypartners."
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