The IRS knows that the tax gap is offshore

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It has become very fashionable to argue that there is no corporate tax gap. The quite absurd claim that Deloitte proved there was none of consequence — claiming it was less than £2 billion an unrelated to offshore  - when working for the Foot Report for the Treasury last year is widely quoted by Tory MPs, but the fact that no one in tax authorities seems to believe them shows the absurdity of the claim. HMRC puts the figure at double the Deloitte claim and the IRS clearly has no truck for the idea they seek to promulgate. As the New York Times reports:

The Internal Revenue Service said Wednesday that it would overhaul a unit devoted to scrutinizing large corporations and wealthy individuals, a shift that would bolster the agency’s growing focus on international tax evasion.

The I.R.S. said that it would centralize operations at the core unit, which will now be known as the large business and international division, to give international examiners the authority to decide whether to pursue or settle contentious tax cases involving multinational corporations.

Douglas H. Shulman, the I.R.S. commissioner, said in an interview that the shift would “build up our expertise and sharpen our focus” on the international component of thorny tax problems and tax evasion. “International is going to stay a top priority at the agency,” he said.

Various government and policy research studies show that large corporations are increasingly using gray areas of the tax code to minimize or illegally evade billions of dollars in taxes a year through complex international structures.

Quite so, and unambiguously true.

Have no doubt — the corporate tax gap is alive and growing — and it’s not all down to capital allowances. Not by a long, long way.

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