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Compliance on the Cards

Kitty Miv, Editor
06 August, 2021

It's been a while since we looked at tax compliance matters outside of the scope of BEPS, so this week, we will be focusing on the moves being made by governments to bring errant taxpayers back into line.

We start, unusually, with Kosovo, where the federal tax agency has announced that it has taken legal action against business taxpayers with outstanding liabilities, including seizing assets.

In a July 26 statement, the Kosovo Tax Administration (TAK) said it had confiscated the assets of taxpayers that had failed to respond to the agency's reminder letters. It has also blocked bank accounts and transfers and issued arrest warrants.

Then, in the United States, Chair of the US House Ways and Means Committee, Richard Neal (D-MA), and the chair of the Senate Finance Committee, Ron Wyden (D-OR) indicated that they will push for action to curb the use of IRA accounts as a tax shelter by the country's very wealthiest taxpayers.

The two lawmakers have released new data requested from the Joint Committee on Taxation (JCT) on the prevalence of "mega-IRA accounts", which shows a threefold increase (on 2014 figures) in IRA accounts with account balances of USD5m of more. As of the 2019 tax year, nearly 25,000 taxpayers had aggregate IRA account balances of USD5m or more, and 497 taxpayers have aggregate IRA account balances of USD25m or more. The average aggregate account balance for these 497 taxpayers was more than USD150m.

Meanwhile, in the UK, the tax authorities have been trying to get a handle on the taxation of the so-called "gig economy", with HMRC having launched a new consultation on the implementation of the Organisation for Economic Co-operation and Development (OECD) Model Reporting Rules for Digital Platforms, which will require digital platforms to newly report a wide array of transaction data relevant for tax purposes.

The Model Rules for Reporting by Platform Operators with respect to Sellers in the Sharing and Gig Economy (MRDP) would require digital platforms to collect information on the income realized by those offering accommodation, transport, and personal services through platforms and to report that information to tax authorities. The platforms will also be required to provide a copy of the information to the seller, which will help the seller declare the correct amounts for tax purposes.

Countries are to share the information received under a new information exchange framework developed by the OECD. The data will be sent to the jurisdiction where the sellers are resident (or rental property is located).

The consultation is to close on October 22, 2021, with reporting rules for digital platforms expected to come into force from January 2023 at the earliest.

Finally for this week, returning to the US, and the Justice Department revealed that the Internal Revenue Service has secured a court order authorizing summonses for records relating to US taxpayers who used Panamanian offshore services providers to hide assets and evade taxes.

US District Judge Gregory Woods, of the Southern District of New York, entered an order on July 28, 2021, authorizing the IRS to issue summonses requiring multiple couriers and financial institutions to produce information about U.S. taxpayers who may have used the services of Panama Offshore Legal Services (POLS) and its associates (collectively, the "POLS Group") to evade federal income taxes.

Until next week!


About the Author

Kitty Miv, Editor

Kitty was born in Argentina in 1960 to a Scottish cattle rancher and his Argentine wife. Educated in Edinburgh and at Princeton, Kitty worked for the World Bank as an economist, where she met and married an emigre Iranian banker. During her time with the Bank, Kitty worked in a number of emerging markets, including a spell in the ex-USSR as a Transition Economies Team Leader. Kitty is now a consultant in Brussels and has free-lance writing relationships with a number of prominent economic publications. kitty@lowtax.net


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