The Internal Revenue Service’s recent crackdown on tax evasion and fraud may have initially appeared to be an American phenomenon, but tax law violations appear to be an international issue. As the leaders of the international community meet for the upcoming G-8 summit, tax issues and combating tax evasion are expected to top the list of the summit’s priorities in 2013.
Taxes are central to maintaining countries’ economic viability, and the U.S. along with other developed nations consider closing the tax gap and cracking down on crimes that are taking away from federal revenue to be crucial in strengthening their economies. Currently, the eurozone is in a double-dip recession, while the Japanese trade deficit continues to widen. Economic growth in the U.S., while steady, remains slow. Further, foreign banks that have been found to be complicit in helping Americans evade taxes are facing fines, lawsuits and other financial consequences that may impact their solvency. Most notably, Wegelin and Co., Switzerlands’s oldest bank and the 13th oldest financial institution in the world, was forced to close its doors after admitting to helping U.S. tax evaders carry out their crimes.
In response to these issues, the U.S. has entered into international agreements with several other countries to share information about account holders with offshore accounts. In addition to investigating the more than $8.5 trillion tied up in offshore accounts, the U.S. is also examining the tax habits of the largest corporations, such as Apple, Inc. and Starbucks.
Leaders of the G-8 Summit argue that coordinated global action is essential in helping curb and detect tax avoidance and evasion, according to Reuters. The countries that make up the G-8 – Canada, the United States, the United Kingdom, France, Germany, Italy, Japan, and Russia – plan to encourage territories and popular tax havens to enter into multinational agreements that emphasize transparency and better reporting standards.