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Highlights

With trillions of dollars in cross-border financial activity, U.S. tax authorities and others around the world exchange information with each other to administer and enforce compliance with the tax laws of their respective countries. GAO was asked to (1) identify and describe all income tax treaties and other such agreements between the United States and other countries, (2) describe the volume of exchange activity, types of information exchanged between the United States and its treaty partners, and request processing times, and (3) identify opportunities to improve the effectiveness of current U.S. information exchange processes and procedures. GAO analyzed agreement documents, IRS data on information exchanges, and interviewed program officials and the users of exchanged information.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Internal Revenue Service To identify opportunities to improve the administrative processes and procedures that the IRS uses to exchange information between the United States and its treaty partners, the Commissioner of Internal Revenue should determine the key types of information that exchange program managers could use to ensure the program is working as well as possible. The commissioner should specifically require the collection of (1) consistent and accurate data on specific tax information exchange cases, such as the extent to which requests for information are satisfied and the type of information requested, and (2) feedback from information exchange program users on how well the program is working and how it might be improved.
Closed - Implemented
In August 2012, we received documentation from IRS showing that the agency had approved and commenced implementing programming changes to the information system that the agency uses to track data on exchange of information cases. IRS added data fields for the type of information exchanged, case status, and the disposition of cases, including the extent to which an information request was fulfilled. To capture feedback from information exchange program users, IRS created surveys to gather information about the value and use of the information obtained, and inviting suggestions for Exchange of Information Program improvements.

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