Tax Administration: Preliminary Information on Selected Foreign Practices That May Provide Useful Insights Page: 2 of 20
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i G A O TAX ADMINISTRATION
Accountability * Integrity * Reliability
H eihlt Preliminary Information on Selected Foreign
I II tS Practices That May Provide Useful Insights
Highlights of GAO-11- 540T, testimony to the
Committee on Finance, U.S. Senate
Why GAO Did This Study
The Internal Revenue Service (IRS)
and foreign tax administrators face
similar issues regardless of the
particular provisions of their laws.
These issues include, for example,
helping taxpayers prepare and file
returns, and assuring tax compliance.
GAO was asked to describe (1) how
foreign tax administrators have
approached issues that are similar to
those in the U.S. tax system and (2)
whether and how the IRS identifies
and adopts tax administration
practices used elsewhere.
To do this, GAO reviewed documents
and interviewed six foreign tax
administrators as well as tax experts,
tax practitioners, taxpayers, and
trade group representatives. GAO
also examined documents and met
with IRS officials. This preliminary
information is based on GAO's
ongoing work for the Committee to
be completed at a later date.
What GAO Recommends
GAO makes no recommendations in
this testimony. Understanding how
other tax administrators have used
certain practices to address common
issues can provide insights to help
inform deliberations about tax reform
and about possible administrative
changes in the U.S. existing system to
improve compliance, better serve
taxpayers, reduce burdens, and
View GAO-11- 540T or key components.
For more information, contact Michael Brostek
at (202) 512-9110 or firstname.lastname@example.org.
What GAO Found
Foreign and U.S. tax administrators use many of the same practices such as
information reporting, tax withholding, providing web-based services, and
finding new approaches for tax compliance. These practices, although
common to each system, have important differences. This testimony describes
the following six foreign tax administration practices that address common
issues in tax administration.
Selected Foreign Tax Administration Practices
New Zealand Does integrated evaluations of tax expenditures and discretionary spending
programs to analyze their impacts and improve program delivery
Uses the internet to calculate individual tax withholding rates and revise pre
prepared tax returns to improve service at lower costs
Uses multilateral treaty information exchange on interest payments to member
nations' citizens to spur compliance by individual taxpayers
Uses information reporting and withholding so most wage earners do not need
to file a tax return
Uses a compliance program for high net wealth individuals that focuses on their
full set of business interests to improve compliance
Uses semiannual payments instead of periodic withholding for the Salaries Tax
Source: GAO analysis
Although differences in laws, culture, or other factors likely would affect the
transferability of foreign tax practices to the U.S., these practices may provide
useful insights for policymakers and the IRS. For example, New Zealand
integrates evaluations of its tax and discretionary spending programs. The
evaluation of its Working For Families tax benefits and discretionary
spending, which together financially assist low- and middle-income families to
promote employment, found that its programs aided the transition to
employment but that it still had an underserved population; these findings
likely would not have emerged from separate evaluations. GAO previously has
reported that the U.S. lacks clarity on evaluating tax expenditures and related
discretionary spending programs and does not generally undertake integrated
evaluations. In Finland, electronic tax administration is part of a government
policy to use electronic services to lower the cost of government and
encourage private-sector growth. Overall, according to Finnish officials,
electronic services have helped to reduce Tax Administration staff by over 11
percent from 2003 to 2009 while improving taxpayer service.
IRS officials learn about these practices based on interactions with other tax
administrators and participation in international organizations, such as the
Organisation for Economic Co-operation and Development. In turn, IRS may
adopt new practices based on the needs of the U.S. tax system. For example,
in 2009, IRS formed the Global High Wealth Industry program. IRS consulted
with Australia about its approach and operational practices.
United States Government Accountability Office
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United States. Government Accountability Office. Tax Administration: Preliminary Information on Selected Foreign Practices That May Provide Useful Insights, text, April 12, 2011; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc294229/m1/2/: accessed April 23, 2019), University of North Texas Libraries, Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.