National Press Club

IRS Presses Off-shore Tax Havens, Commissioner Says

April 14, 2009 | By Hope Katz Gibbs

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With millions of Americans are facing job losses and the threat of foreclosure — and just two days before the April 15 income tax filing deadline — IRS Commissioner Douglas Shulman told the luncheon audience, “In today’s economic environment, it’s more important than ever that the American public feels confident that individuals and corporations are playing by the rules and paying the taxes they owe.”

He said the IRS has been turning up the pressure on off-shore financial institutions that help U.S. citizens conceal taxable income.

“We are breaking down the much vaunted veil of secrecy,” said Shulman, who began his five-year term on March 24, 2008. “We have framed an aggressive, proactive and balanced agenda to lead the IRS into a new era of global tax administration. We will confront areas of complexity where there are opportunities for some to push the envelope, yet remain firmly grounded in the reality that our system of taxation is one of many critical components of a vibrant, global economy.”

Shulman said there is no silver bullet or one strategy that will alone solve the problems of offshore tax avoidance.

“Rather, an integrated approach is needed, made up of separate but complementary programs that will tighten the net around those not paying what they owe,” he said, pointing to several initiatives including increasing the number of audits in this area and prioritized stepped-up hiring of international experts and investigators. “We are also looking for ways to improve the information we receive from foreign banks, and also through access to wire transfers.”

A fan of historic references, Shulman harkened back to April 13, 1943 — the day FDR dedicated the Thomas Jefferson Memorial and Congress passed the Current Tax Payment Act, which established income tax withholding laws. The number of individual returns swelled from 14 million that year to almost 60 million in 1960. Today, about 100,000 IRS employees operate under a budget of approximately $11 billion and process more than 250 million individual and business tax returns. All totaled, the IRS is responsible for collecting approximately $2.4 trillion in tax revenue to fund most government operations and public services.

Like Jefferson, Shulman said he is determined to “advance to keep pace with the times and meet the enormous challenges that lay ahead.”

Since President Obama signed the American Recovery and Investment Act on Feb. 17, Shulman developed new withholding tables to ensure money would get into American’s pockets through the Make Work Pay Credit.

“We have also shifted resources to deal with the expected growth of bankruptcies and business workouts,” Shulman said. “We are working with the Treasury Department on a number of regulations to clarify rules, or remove friction, as we are doing our part to unclog the credit markets.”

Shulman said the message he wants to send to Americans is that the IRS is going the extra mile to help those in economic distress. “We want to get you your refunds as quickly as possible. And if you think you can’t pay, please come in and let’s talk about it. There are steps we can take to help.”

Shulman concluded by announcing that the IRS is hiring. “If you want to do good work for the American people, we’d love to see your resume.”