At New York University’s Tax Controversy Forum in New York last Friday, Michael Danilack, deputy commissioner (international) of the Internal Revenue Service, told hundreds of tax lawyers that being more strategic was essential to the agency.
Danilack, who oversees the recently revamped Large Business & International division, flashed up a PowerPoint slide entitled, “Key Drivers of the New International Function.” The division was remade in October 2010 to concentrate on the international aspects of taxation for large U.S. multinationals.
The IRS, subsequent slides said, was now “focusing on cases/issues where taxpayers engage in aggressive planning.” Other slides said the agency was “moving into areas not receiving sufficient attention” and “willing to let go of less important issues to move to matters of strategic importance.”
Cue transfer pricing, which dominated the rest of Danilack’s talk. The IRS has watched with unease as a growing number of multinational corporations book increasingly large profits overseas, often in tax-haven countries. Danilack said the agency was staffing up a newly designed “field-focused Transfer Pricing Initiative.”