Commissioner of the Internal Revenue Service Announces Joint Audits for Persons with International Tax Profiles; Update on UBS Initiative
On June 8, 2010, Commissioner Douglas H. Shulman addressed members of the Organization for Economic Co-operation and Development (the "OECD") and leaders in the international tax and business community in Washington, D.C. The topic of his address was coordination of international tax compliance and tax administration. In starting off, Commissioner Shulman remarked that the "next rung in the evolutionary ladder of international tax administration is the progression from cooperation to coordinated action on global tax issues. This is a gradual process that will not take place in a day and a night. It will take time and deliberate and focused action". This need for global cooperation on the audit level has become required due to an ever increasing globalization of capital markets, cross border flow of funds, technology advancements and off shore investment. This not only affects the US, Shulman noted, but the entire world. As Chair of the Forum on Tax Administration (FTA), the Commissioner acknowledged that he has been working with his international counterparts to build greater cooperation between tax authorities both domestically and internationally. Among the critical matters that need to be addressed with a "unified voice" include offshore compliance, corporate governance, high net worth individuals, coordinated joint audits and early competent authority resolution. Indeed, Shulman announced, the IRS is working on a protocol for joint audits with other countries. A joint audit does not necessarily mean a simultaneous exam but instead is a process where two or more countries join together to carry out a single audit of a company with cross-border business activities. The intended objective is increasing international tax compliance and perhaps reduce audit costs while increasing the level of service. Benefits are also foreseeable in the competent authority Shulman added. Now and in prior years it could take years to resolve double-tax cases through the CA process. With a joint audit, identification of issues and assembling the material facts may be expedited and accelerate the time that the CA process needs to play itself out. In moving forward with the joint audit approach, Shulman revealed that the FTA is developing a guide that would provide a how-to, practical approach that highlights pitfalls to avoid, and possible best practices to employ. Commissioner Shulman also spoke of the updates on enforcement efforts pertaining to the Swiss government on the release of information on U.S. account holders of UBS and the number of individuals, approximately 15,000, who made timely disclosures under the VDP program initiated last year in response to the UBS crisis. Shulman noted that 97% of those who filed were accepted into the program.
