TaxCorporate TaxAdvisers look at US plans to close tax gap

Advisers look at US plans to close tax gap

As debate rages over the tactics employed by HM Revenue & Customs to try and close the tax gap, focus for this week at least has shifted across the Atlantic

With HMRC struggling to pull together an accurate figure for the total tax
gap in the UK, with some estimates reaching as high as £97bn, the US Internal
Revenue Service has unveiled strategy for reducing its own tax gap, estimated at
around 14% of total revenue, which would equate to $350bn (£187bn). The plans,
which will no doubt be pored over closely by the UK tax profession, are split
into several tranches.

First, to reduce opportunities for evasion, the IRS suggests strengthening
reporting requirements and expanding its access to reliable data. Second, new
and regular research will be undertaken, with 5,000 corporation tax returns that
were filed between 2003 and 2004 being re-examined. In a move similar to that
undertaken by HMRC, IT will form a big part of the IRS’ plans to reduce the tax
gap. It will replace its so-called ‘antiquated’ core accounts management systems
and technology, and reduce the cost, while enhancing online tax filing.

IRS will release the next phase of its Taxpayer Assistance Blueprint, which
will include a process for assessing taxpayer needs and preferences and create
customer-focused performance and outcome measures.

With the UK government constantly facing calls to simplify its tax system,
the IRS has admitted its own rules are ‘too complicated’.

Further partner and stakeholder cooperation has been mooted.

This will include better transfer of information between itself and foreign
tax authorities to ensure tax compliance, and better cooperation between its
federal states. Liaison and education activities will also take place with
advisers.

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