The international tax consultants at LSL CPAs mark the institution of the International Campus Compliance Unit by the IRS to help close the International Tax Gap. The United States Treasury Inspector General for Tax Administration (TIGTA) report numbered 2013-30-113 to the Internal Revenue Service Commissioner had and will continue to have a definite impact on anyone conducting cross-border transactions subject to IRS taxation.
With experience navigating and minimizing the U.S. tax implications of such cross-border transactions, the international tax consultants at LSL CPAs in Orange County can help taxpayers avoid unnecessary IRS fines and transactional difficulties.
The IRS Problem Of The International Tax Gap
Since the 21st century increase in globalization, including the spread of foreign trade through Internet commerce, the IRS has acknowledged the growth of the International Tax Gap. A simple definition of the International Tax Gap is the difference between taxes owed by United States citizens or foreign persons whose cross-border transactions are subject to US taxation and the amount of tax the IRS managed to collect. Such uncollected taxes comprise a large portion of the International Tax Gap.
From the 2014 FATCA deadline to the emphasis on the Voluntary Disclosure Act, the IRS has been working on multiple strategies to close the International Tax Gap. A significant part of the overall IRS strategic plan was the institution of the International Campus Compliance Unit (CCU). Although instituted in 2010, the bite of the enforcement teeth of the CCU became truly apparent in 2013.
The CCU has enabled the IRS to greatly expand audit coverage of tax returns, including cross-border transactions. By creating a watchful eye, the IRS hopes the International Campus Compliance Unit will increase compliance among taxpayers with foreign interests. In instances where such compliance requirements are not respected, the goal of the CCU is to make IRS enforcement efforts both broader in scale and more precise.
Institution Of The CCU By The IRS
Although the CCU was instituted in 2010, the actual inventory selection criteria for the CCU audit are still being modified and improved by the IRS. For fiscal years 2011 through early 2013, the CCU conducted almost 18,000 audits. During this time, the CCU examiners assessed approximately $36 million in additional taxes, including penalties and interest. The CCU’s performance drastically improved from 2011 to 2012, resulting in a 50% increase in assessments. Despite such success, the efforts of the International Campus Compliance Unit will continue to increase in 2014.
The Treasury Inspector General for Tax Administration (TIGTA) has recommended that the IRS enhance the performance measures for the International Campus Compliance Unit to more specifically reflect the work performed by CCU examiners. In light of this recommendation, the Internal Revenue Service plans to evaluate the current performance measures to improve the overall success of the CCU program. By tying its targeting mechanism to the work of the actual examiners on the ground floor, the International Campus Compliance Unit program will continue to evolve.
The CCU & Closing The International Tax Gap
If the CCU is becoming more precise, U.S. citizens and foreign individuals conducting cross-border transactions in this country must ensure their future compliance with the IRS. It is essential to realize the IRS will not stop refining the CCU and other such enforcement efforts until they have closed the international tax gap. The international tax team at LSL CPAs knows how to safeguard such cross-border transactions and ensure proper reporting.
This content contains accurate information. However, It is inherently limited due to the length of the article and the complexity of the International Campus Compliance Unit issues being discussed. In addition, pursuant to U.S. Treasury Department Regulations, any federal tax advice in this article is not intended or written to be used for the purpose of (1) avoiding tax-related penalties under the Internal Revenue Code or (2) promoting, marketing, or recommending to another party any tax-related matters addressed herein.
It is important to further note that this article presents only a partial view of the subject matter. It does not claim or attempt to be comprehensive or perfectly accurate.
