Country-by-Country Data Under Microscope: IRS

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By Alison Bennett

Oct. 28 — The IRS has a message for taxpayers giving data to the U.S. and to other jurisdictions under the country-by-country reporting regime: Be consistent and be careful.

“New information is coming into our possession,” Large Business & International Division Commissioner Douglas W. O’Donnell said Oct. 28. “A lot of us are going to have the same information now. Taxpayers need to make sure that what they report to each one of the jurisdictions is the same.”

O’Donnell said the Internal Revenue Service likely will be having discussions with other countries to compare notes. If the information is even “slightly different” regarding an affiliate a big company might have in another jurisdiction, “it could lead to some interesting questions,” he said.

O’Donnell said that the information coming out of the country-by-country initiative will provide “a number of opportunities” to craft new approaches to the way the IRS deals with taxpayers in the transfer pricing arena.

Framework of Cooperation

O’Donnell envisioned a framework of cross-border cooperation to decide on enforcement actions. “There is in my view a benefit to bringing tax jurisdictions together” to decide which taxpayers should be audited—and which ones not to audit, he said.

That process would focus on evaluating risk and also would look at who could be “de-selected,” he said at a conference on international tax enforcement and controversy sponsored by the American Bar Association Section of Taxation and Tax Executives Institute Inc.

Speaking with other tax authorities could give the IRS a better picture of what taxpayers are doing globally, O’Donnell said.

To contact the reporter on this story: Alison Bennett in Washington at

To contact the editor responsible for this story: Meg Shreve at

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