U.S. TAX AGENCY INCREASES INTERNATIONAL AUDITS
The Internal Revenue Service (IRS)
said it was stepping up compliance efforts by its international
staff to recover some of the billions of dollars lost each year
in unpaid taxes.
    The agency was shifting emphasis by its international
branch to increase compliance by the 47,000 foreign-owned
American companies and foreign firms operating in the United
States, IRS officials said at a news conference.
    The IRS also was taking a closer look at compliance by
Americans living abroad and by taxpayers in the United States
with income from overseas investments.
    Percy Woodard, assistant IRS commissioner, international,
denied that the agency was picking on foreign companies, but he
said fewer of them pay taxes than comparable U.S. firms.
    In some industries, one pct of foreign firms paid U.S.
taxes, he said. Other IRS staff said the taxes paid by foreign
companies ranged from 16 to 19 pct less than taxes paid by U.S.
firms.
    "If our taxpayers in another country are expected to fulfill
their tax-paying responsibilities in that country, then
foreigners in our country can be expected to do the same thing,"
Woodard said.
    In addition, as many as 61 pct of the 2.5 mln Americans who
live abroad do not file tax returns, costing the government 2.3
billion dlrs a year, Woodard said.
    The total tax gap -- the difference between taxes owed and
actually paid to the government -- is about 90 billion dlrs.
    Millions of dollars are lost because Americans fail to
report foreign income and because U.S. businesses with foreign
operations can underreport income, Woodard said.
    The IRS will increase compliance by reassigning 100    
examiners to international tax returns, a 25-pct increase,
which should lead to more tax return audits.
    The IRS will study entire industries to spot trends or
practices by foreign-owned companies in their compliance with
tax laws, Woodard said.
    The IRS looked at the electronics industry first, but
Woodard denied it was because of the trade dispute over
semiconductors between the United States and Japan.
    The agency next will turn its attention to the automobile,
computer and motorcycle industries.
    The IRS will also receive information on anyone who applies
for a U.S. passport or permanent residence in the United States
to help indentify those who do not file returns.
 Reuter
