IRS Employs 90,000 Examiners to Audit Alleged “Transfer Pricing” Tax Evaders

The IRS is expending $11.8 billion to finance an army of 90,000 agents in a quest to acquire new sources of taxable revenue from companies that shift their profits from one country to another as a means of reducing U.S. tax liability.  The practice is called “transfer pricing” and it is almost impossible to identify and prove.  In December of 2011, Western Union Company publicly revealed that it would pay $1.2 billion to the IRS as part of a transfer pricing settlement with the service.

At the same time, the IRS continues to expand its audits of highly compensated individuals in an effort to find tax evasion or underreporting of income, as the political pressure mounts on IRS to find new ways to bring in more tax revenue to satisfy the insatiable appetite of the federal government.  Reflecting public consternation with an increasingly complex tax code, Citigroup chief economist Willem Buiter told Bloomberg Radio on March 20, 2012: “As a U.S. citizen, I had to try and get the data together to give to the person who prepares my tax returns, and I almost had a nervous breakdown collecting the data!  The U.S. tax system is completely incomprehensible!  My wife and I are both Ph.D.’s in economics—both of us!—and we can’t make head or tails of it.”

See also:

Richard C. Morais, “Illicit Transfer Pricing Endangers Shareholders,”

Patrick Temple-West, “US IRS forms ‘SWAT team’ for tax dodge crackdown,” Reuters (March 20, 2012)

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