Friday, June 3, 2011

IRS Falls Short on Exchange of Information

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Despite increased efforts to crack down on international tax cheats, the IRS remains lacking in the use of some of the basic tools at its disposal. As reported by BNA in the January 26 Daily Tax Report, Swedish broadcaster SVT recently determined that the Swedish national tax agency (Skatteverket) has failed to receive any data from the IRS since 2006.

The U.S. and Sweden signed a double tax convention in 1994 which provides in Article 26 for the exchange of information between the tax authorities of the two countries. This information can be used for carrying out the terms of the treaty, as well as for enforcing domestic tax law. According to the SVT report, the most recent data provided by the IRS to Sweden was for 2004, although the Skatteverket later released a statement that in 2010 it had received 2005 and 2006 data. According to the Swedish broadcaster, the IRS suspended the transfer of information to Sweden after it had problems with an unidentified subcontractor who was responsible for transmitting the data.

Although Congress and the Obama Administration have recently shown increased zeal for the reporting of cross-border transactions, it appears that the IRS continues to have difficulty in using the tools already at its disposal.

Harold W. Pskowski, Managing Editor for U.S. International.

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