tax evasion cases involving foreign nations B u s i n e s s F i n a n c e
Post your initial response to one of the following discussion topics (topic 1 or topic 2) Make sure your responses are substantive in nature and that you reference the applicable IRC code provisions and other professional sources used to support your postings.
Discussion Topic 1: Consider the role of the United States Treasury Department, the Internal Revenue Service, in international taxation. What do you think are the major obstacles facing the Internal Revenue Service as our markets continue to become more international? As our international markets continue to evolve, how might the Internal Revenue Service’s role change?
Discussion Topic 2: What are the implications of the Supreme Court decision in South Dakota v. Wayfair, Inc. on foreign companies with U.S. customers?
Do the discussion first with citation and references then response each posted below.
As the markets continue to become more international, the IRS also continues to realign and expand its global efforts under its Large Business and International Division. The IRS expects that these efforts will enhance international tax compliance, keeping the primary focus on high-risk issues and cases with greater more efficiency and consistency. The IRS continues to work along with the United States Department of Justice on tax evasion cases involving foreign nations with bank secrecy laws that prevent US from getting information on the taxpayer’s transactions. To avoid the above discussed obstacles, the IRS may be required to sign agreements and treaties on double taxation with tax authorities in other countries which are a host to the United States corporations. Additionally, their IRS needs to investment in efficient modern technology for the close monitoring on the offshore transactions which are main source of tax evasion.
The case of South Dakota v. Wayfair considered whether businesses without a physical presence in the state should be required to remit the state tax (AICPA, 2020). This would include companies that have an online presence but no physical location in the state. It was decided that businesses with over 200 orders or $100,000 in in-state sales would qualify for this requirement (2020). This has a number of implications on international businesses.
Since the ruling was enacted, many states have made their own ruling. There are 45 states that have created their own stipulations on this issue (Leven & Ruedenburg, 2019). Multinational corporations will have to stay up to date on the different requirements. Sales will have to be tracked in each state and if sales reach the threshold they will have to comply with tax requirements, register to collect sales taxes and “fulfill requests from state Secretaries of State and/or Tax and Revenue Departments” (2019). This increases the work for companies, more regulations and perhaps would require more tax specialists.
AICPA. (2020, March 8). South Dakota V. Wayfair. https://us.aicpa.org/advocacy/state/south-dakota-v-wayfair
Levin, L., & Ruedenburg, R. (2019, January 2). International Tax Considerations in Light of South Dakota v. Wayfair, Inc. PKF O’Connor and Davies.