Wolters Kluwer Corporate & Financial Services will provide the Internal Revenue Service with online access to capital gain and loss information on publicly traded securities.
Under the contract, IRS agents will be able to access the CCH Capital Changes online database, which contains information on more than 100,000 companies, as they conduct research, verify taxpayer returns, or pursue audits of returns. CCH Capital Changes, part of the Wolters Kluwer division, provides basis tracking and follows related tax issues involving stocks in the U.S. and world capital markets. Basis is essentially the purchase price of a security adjusted for any corporate actions, such as splits or mergers, which result in a change to the cost basis of a security.
"The IRS faces one of the same challenges that many taxpayers also face -- accurately tracking the cost basis of security holdings necessary for accurate calculation of capital gains and losses," said vice president of securities and insurance for Wolters Kluwer David Stephens, in a statement. "With access to CCH Capital Changes, the IRS has an accurate, independent way to verify the information taxpayers are providing about their gains and losses."
Taxpayer over-reporting of basis -- reporting that the cost of the basis of the security is higher than it truly is and resulting in lower reported gains -- is estimated to cost the IRS several billions of dollars annually in uncollected capital gains tax, according to a 2004 report by the nonpartisan group Tax Analysts.
CCH Capital Changes was selected as a source of tax information as part of an existing contract with LexisNexis under the IRS's Electronic Research Program. This contract also includes additional CCH content.
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