IRS, states expand efforts to fight money laundering

The IRS and state tax administrators are increasing information sharing to identify nonfilers, detect the abusive use of offshore payment cards and uncover money laundering. The IRS will also provide one-stop Internet service to businesses and individuals seeking both state and federal employee identification numbers for their enterprises.

The IRS and states have uncovered tens of millions of dollars in previously unidentified abusive tax avoidance transactions, leading the federal and state tax agencies to expand their collaboration.

'We've already shared 28,000 leads with the states. We're going to build on this effort to pursue cheaters and expand the program to attack money laundering,' IRS Commissioner Mark Everson said yesterday.

The IRS, 48 states and the City of New York and the District of Columbia launched the Abusive Tax Avoidance Transaction partnership late last year. Besides sharing more than 28,000 leads of those participating in such transactions, the IRS will work to assess and collect tax liabilities associated with the project.

The IRS and states will cooperate to reduce duplication, improve taxpayer service and intensify the fight against noncompliance with the state and federal tax systems, Everson said. Some of the new joint initiatives include:

  • State Income Tax Reverse Filing Match. The IRS will match state income tax filing information against federal data to identify discrepancies, including potential nonfilers and those underreporting income.


  • Fed/State Offshore Payment Card Matching Initiative. The IRS is expanding use of state databases to assist in identifying and locating taxpayers who have participated in offshore credit card abuse.


  • Title 31 Money Services Business Memorandum of Understanding. This agreement provides a framework for the federal-state exchange of compliance examination data associated with money services. This initiative is the result of partnership efforts of the IRS, the Financial Crimes Enforcement Network and state regulatory agencies.


  • Federal State Internet Employee Identification Number. Taxpayers will be able to obtain simultaneously via the Internet an EIN from the IRS and a registration number for sales tax and/or income tax from their home state.


About the Author

Mary Mosquera is a reporter for Federal Computer Week.

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