IRS And Foreign Tax Administrators Encounter Similar Issues Even Though Tax Law Provisions May Differ

IRS and foreign tax administrators encounter similar issues even though their tax law provisions may differ, the Government Accountability Office (GAO) recently told the Senate Finance Committee. (GAO-11-540T) GAO cited examples such as assisting taxpayers with the preparation and filing of returns, and ensuring tax compliance. GAO's testimony described the way foreign tax administrators deal with issues similar to those encountered in the U.S. It also addressed IRS's approach to the possibility of adopting tax administration practices used in other countries. As the basis for its testimony, GAO looked at tax administration practices in Australia, the European Union, Finland, Hong Kong, New Zealand, and the United Kingdom. As described by GAO, foreign and U.S. tax administrators use common practices, including information reporting, tax withholding, and seeking new approaches for tax compliance. “These practices, although common to each system, have important differences,” GAO said. “Although differences in laws, culture, or other factors likely would affect the transferability of foreign tax practices to the U.S., these practices may provide useful insights for policymakers and the IRS,” GAO added. IRS officials learn about various practices through interactions with other tax administrators and participation in international organizations, such as the Organization for Economic Co-operation and Development. The GAO testimony can be found at http://www.gao.gov/new.items/d11540t.pdf.