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Why did we do this audit?
An IRS employee raised concerns about the agency's ability to effectively address large multinational corporations' use of potentially abusive tax structures. We evaluated those concerns by reviewing the IRS’s policies and procedures for ensuring tax compliance among large multinational corporations.
What did we find?
Large multinational corporations can structure their operations and transactions for tax planning and sometimes tax evasion purposes. Some planning strategies use the establishment of entities in foreign no-tax or low-tax jurisdictions as a sole means to hide income producing assets or underreport income from U.S. taxation.
Concerns were also raised by employees regarding policies and procedures that could appear to be favorable towards large multinational tax administration. These included - among others - that large multinational taxpayers can directly contact IRS executives and that some large multinational corporate taxpayers may not be suitable for the Compliance Assurance Process program (a voluntary program for some of the largest and most complex taxpayers where they agree to engage in a transparent relationship with the federal government prior to filing a return).
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