In its ongoing quest to increase tax compliance, the U.S. Department of the Treasury recently signed an agreement with Monaco to allow for the exchange of information on tax matters between the two nations. The move will allow the U.S. to access the information it needs to investigate and prosecute violations of tax laws and hopefully further reduce the nation's tax gap, which represents the $345 billion in annual taxes that are legally owed but never collected.
"This Administration is wholeheartedly committed to combating offshore tax evasion," said Deputy Secretary Neal Wolin, who signed the agreement with Monaco Minister Franck Biancheri in Washington. "We are working with countries like Monaco to ensure that the Internal Revenue Service (IRS) has access to the information that it needs to enforce U.S. tax law. Today's agreement serves as an example for other financial centers around the world and reflects our continued efforts to end the use of offshore accounts as a tool for tax evasion."
This most recent Tax Information Exchange Agreement (TIEA) with Monaco falls into an ever-lengthening list of actions taken by the administration to increase enforcement of tax laws worldwide. At the Group of 20 (G20) Leaders' Summit, held in London last April, the U.S. voiced its support for efforts to ensure that all countries adhere to international standards for the exchange of tax information. Since then, the Treasury has also reached agreements with Gibraltar and Luxembourg to allow for a smoother exchange of information. In June, the Treasury also amended its income tax treaty with Switzerland to provide for more tax information exchange and just last month the IRS reached a settlement with global Swiss financial services giant, UBS AG, which required the firm to turn over information on 4,450 accounts suspected of evading U.S. tax laws.
As is the case with most TIEAs, only specific tax authorities will be permitted to receive and send sensitive tax information and the data exchanged can only be used for tax purposes. U.S. authorities will be able to begin seeking information from Monaco, beginning in 2010, on all types of taxes in both civil and criminal matters regarding tax years from 2009 onward.
Jacob Barron, NACM staff writer. Follow us on Twitter at http://twitter.com/NACM_National.