By Jim Kouri
In reaction to the worldwide economic turmoil with governments squeezing every penny possible out of taxpayers, Swiss bankers find themselves in the position of actually enticing clients from emerging markets or face a “slow death” as the pursuit of so-called tax evaders increases by U.S. and European authorities, according to The American Banker on Thursday. And U.S. Treasury Secretary Timothy Geithner is at the forefront of chasing tax dodgers.
Few Americans are aware that their personal and financial information is being given to foreign nations by the U.S. Internal Revenue Service in the name of “getting Americans to pay their fair share.” And the globalists in the U.S. government are happy to share Americans’ confidential information, according to information from a political strategist and tax attorney given to the Law Enforcement Examiner on Thursday.
With trillions of dollars in cross-border financial activity, U.S. tax authorities and others around the world exchange information with each other to administer and enforce compliance with the tax laws of their respective countries. In many cases, these information exchanges are similar to that which is exchanged in criminal cases, according to attorney and consultant Michael Baker, who spoke with the Law Enforcement Examiner.
Sadly, in dealing with taxpayers information, no warrants are necessary and the process disregards the U.S. system of jurisprudence that recognizes the time-honored “innocent until proven guilty,” said Baker.
Recently the U.S. Congress requested its investigative arm, the Government Accountability Office, to identify and describe all income tax treaties and other such agreements between the United States and other countries as well as describe the volume of exchange activity, types of information exchanged between the United States and its treaty partners, and request processing times.
In addition, the GAO was asked to identify opportunities to improve the effectiveness of current U.S. information exchange processes and procedures. GAO analyzed the international agreement documents, IRS data on information exchanges, and analysts interviewed program officials and the users of the exchanged information.
Treaties and other agreements authorizing information exchange provide tax authorities in the United States and abroad with a useful tax law enforcement tool. As of April 30, 2011, the United States had such agreements in force with 90 foreign jurisdictions, according to the GAO analysis. While such information sharing can be rationalized when dealing with transnational organized crime gangs, drug cartels and terrorist groups, many who discover this information-sharing are suspicious when it relates to law-abiding citizens who pay the taxes that pays the salaries of IRS managers and enforcers.
IRS-international agreements have many similar features, but the bounds within which information can be exchanged are unique to the legal and administrative arrangements agreed to by the United States and each partner.
Between 2006 and 2010, 5,111 requests for information to or from the United States and 75 foreign jurisdictions were completed; 4,217 were incoming requests for information such as tax returns or corporate records and 894 were outgoing requests from the United States.
IRS’s enforcement also relies on several other methods to obtain relevant information, including a mechanism which yields about 2.1 million records annually from treaty partners. GAO estimates that most requests close about 50 to 200 days after being opened, but some take much longer. The time it takes to close requests can be influenced by factors such as the complexity of the requested information and the legal system of the treaty partner.
GAO analysis of IRS data shows that the United States takes more time to close incoming requests for some groups of countries than others. Although IRS collects data on exchanges between the United States and its treaty partners, the agency does not consistently collect or analyze performance information, such as the type of information requested, whether the information was collected successfully, or feedback from staff making the requests about the usefulness of the information or their views on the process for obtaining it.
According to the GAO analysis, collecting this taxpayer information could help program managers assess how well the IRS is managing the information exchange process, and whether changes to administrative processes and procedures could improve the exchange of information between the United States and its treaty partners.
The GAO recommended to Congress that the Commissioner of Internal Revenue determine the key types of performance information that exchange program managers could use to ensure the program is working as well as possible.
Specifically, the Commissioner should require the collection of consistent and accurate data on specific tax information exchange case