IRS and Puerto Rico Announce Partnership to Fight Abusive Transactions

The Internal Revenue Service and Puerto Rico Department of the Treasury, the Hacienda, this week announced a new partnership to fight abusive tax avoidance transactions.

The partnership is the latest development in an effort unveiled in September 2003 to enable federal, state and commonwealth tax agencies to join together in ensuring all taxpayers fulfill their obligations under the tax code. Puerto Rico joins 48 states, the District of Columbia, New York City and the Virgin Islands on the list of tax agencies that have signed partnership agreements with the IRS. Like these tax agencies, the Hacienda will be working with the IRS to combat abusive tax avoidance transactions by sharing information and resources.

“This is a logical extension of our existing relationship with 48 states, several cities and the Virgin Islands,” said IRS Commissioner Mark W. Everson. “We are pleased to work with the Hacienda to help ensure compliance with the tax laws.”

In 2004 the IRS has shared leads with partner agencies on more than 35,000 taxpayers engaged in abusive tax avoidance transactions. Upfront information sharing helps the organizations avoid duplication of efforts and maximizes resources by eliminating the need for multiple audits of the same taxpayers.

The scope of the partnership also includes information-sharing and coordination on issues related to self-employment. Self-employed residents of Puerto Rico pay income tax to the PR Hacienda and also have a requirement to file a Form 1040-PR, Self-Employment Tax Return – Puerto Rico, or a Form 1040-SS, U.S. Self-Employment Tax Return, with the IRS.

”In the Department of the Treasury we are pleased to join efforts with the IRS,” PR Assistant Secretary for Internal Revenue Rebeca Vargas said. “Together we will accomplish our goals.”

In addition to the Commonwealth of Puerto Rico, others that have signed agreements with the IRS include: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, District of Columbia, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, New York State, New York City, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, U.S. Virgin Islands, Virginia, Washington, West Virginia and Wisconsin.

You may like these other stories...

Tax accounting to be simplified for money-market fundsThe US Securities and Exchange Commission (SEC) voted 3-2 on Wednesday for sweeping changes to institutional money-market funds, Emily Chasan, senior editor of...
By Cathy Stopyra and Todd SimmensUnderpayment interest, refund interest, and penalties charged to businesses are just a few of the considerations the IRS calculates when determining taxation for a given company. Though...
FASB mulling a revamped income statementDavid M. Katz of CFO wrote on Tuesday that the Financial Accounting Standards Board (FASB) is in the early stages of researching whether to launch a project aimed at improving and...

Upcoming CPE Webinars

Jul 31
In this session Excel expert David Ringstrom helps beginners get up to speed in Microsoft Excel. However, even experienced Excel users will learn some new tricks, particularly when David discusses under-utilized aspects of Excel.
Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.
Aug 20
In this session we'll review best practices for how to generate interest in your firm’s services.