Daily Tax Update - November 8, 2016: UK Taskforce Launches Criminal and Civil Investigations Into Panama Papers

UK Taskforce Launches Criminal and Civil Investigations Into Panama Papers:  Her Majesty’s Revenue and Customs, the UK department responsible for collection of taxes, announced that the cross-agency Panama Papers taskforce has launched multiple criminal and civil investigations.  The taskforce was created in April, to analyze all the information that had been made available from the International Consortium of Investigative Journalists Panama Papers data leak.  The announcement, which also includes an update on the taskforce’s activities to date, states that more than 30 individuals and companies are under active investigation for criminal or serious civil offences linked to tax fraud and financial wrongdoing uncovered by the Panama Papers taskforce partners, with hundreds more under detailed review.  

TIGTA Releases Report on Use of Virtual Currencies in Taxable Transactions:  The Treasury Inspector General for Tax Administration (TIGTA) released a report on the additional steps the IRS should take to ensure taxpayer compliance in transactions using virtual currencies.  

TIGTA recommended that the IRS:

  • Develop a coordinated virtual currency strategy that includes outcome goals, a description of how the agency intends to achieve those goals, and an action plan with a timeline for implementation
  • Provide updated guidance to reflect the necessary documentation requirements and tax treatments needed for the various uses of virtual currencies
  • Revise third-party information reporting documents to identify the amounts of virtual currencies used in taxable transactions

The IRS agreed with TIGTA’s recommendations and plans to develop a virtual currency strategy including an assessment of whether changes to information reporting documents are warranted.  The IRS also agreed that additional guidance would be helpful and plans to share the recommendation with the IRS’s Office of Chief Counsel for coordination with the Department of the Treasury’s Office of Tax Policy.