30/03/22

US: IRS admits it cannot cope with volume of Fatca reports.

As published on international-adviser.com, Wednesday 30 March, 2022.

The US Internal Revenue Service (IRS) has revealed it is struggling to process data which may require regulatory intervention due to limited capabilities.

This includes actions needed for international reports under the Foreign Account Tax Compliance Act (Fatca).

In a written testimony to the US House ways and means committee, subcommittee on oversight on the tax filing season and IRS operations, IRS commissioner Charles Rettig lamented a lack of resources to deal with the volume of reports – both on the domestic and international front.

He added that the IRS is still waiting to receive any “significant funding” needed to implement Fatca oversight.

In his letter, Rettig said: “Because of our current funding and staffing limitations across our enforcement functions, we are forced to make difficult decisions regarding priorities, the types of enforcement actions we employ, and the service we offer.

“Limited IT resources preclude us from building adequate solutions for efficiently matching or reconciling data from multiple sources. As a result, we are often left with manual processes to analyse reporting information we receive. Such is the case with data from the Foreign Account Tax Compliance Act.

“Congress enacted Fatca in 2010, but we have yet to receive any significant funding appropriation for its implementation. This situation is compounded by the fact that when we do detect potential non-compliance or fraudulent behaviour through manually generated Fatca reports, we seldom have sufficient funding to pursue the information and ensure proper compliance.

“We have an acute need for additional personnel with specialised training to follow cross-border money flows. They will help ensure tax compliance by improving our capacity to detect unreported accounts and income generated by those accounts, as well as the sources of assets in offshore accounts.”