IRS Detecting More Tax Abuse, Says Everson

by Mike Godfrey, Tax-News.com, Washington

22 March 2005

Speaking at a National Press Club luncheon, IRS Commissioner Mark W. Everson said that Internal Revenue Service officials referred more than 3,000 cases to the Justice Department for possible criminal prosecution last year, 20% up on 2003.

Mr. Everson said: "We are going after promoters of tax shelters - both civilly and, where warranted, criminally." Previously, during a criminal investigation, civil activity was suspended, said the Commissioner, so that IRS officials were reluctant to refer matters for criminal investigation lest they lose their traditional turf. Now the two tracks are pursued simultaneously.

Mr. Everson also applauded the work of the Joint International Tax Shelter Information Centre in detecting aggressive cross-border tax planning techniques. "Since last Labor Day, we have had an operational task force of personnel from Australia, Canada, the United Kingdom and the US working together on-site here in Washington," he said.

The main focus of the group is the scrutiny of corporate tax arbitrage and transfer pricing arrangements. However, it is also examining the role played by accountants, bankers and lawyers who dispense advice to multinationals on tax planning issues. "We have seen things we either would never have picked up or would have picked up years down the road," Mr Everson said. "It makes sense that we continue to work with other countries, because in this increasingly global world, we are up against what is, in essence, a reinforcing commercial network of largely stateless accounting firms, law firms, investment banks and brokerage houses."

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