SMRs and AMRs

Thursday, May 03, 2007

I.R.S. Curtails Many Audits in Tax Havens

By EDMUND L. ANDREWS
New York Times

WASHINGTON, May 2 — The Internal Revenue Service is curtailing audits of many people who use offshore tax havens, even when agents see signs of tax evasion, because agents fear they cannot meet a three-year deadline for finishing an examination, Congressional investigators have found.

In a report to be released on Thursday, the Government Accountability Office found that I.R.S. agents are so hobbled by “dilatory tactics” by offshore taxpayers and other problems that it takes almost two and a half years to complete a typical audit.

Many I.R.S. agents told the G.A.O., the investigative arm of Congress, that the “safest way” was often to stop an audit prematurely and sometimes to refrain from starting one in the first place.

The I.R.S. reported that almost $300 billion in investment and business income was moved out of the United States in 2003. Analysts at the Joint Committee on Taxation have estimated that the annual outflow has shot to more than $400 billion since then.

Of that, only a small portion went to tax havens that impose few taxes of their own and provide little information to authorities in the United States. Most went to countries with tax treaties and agreements to exchange financial data with the United States. The report did not provide a breakdown of how much money went to specific countries.

(Continued here.)

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