Experiences at the USA

The one week training here at the USA comprised academic sessions of high quality by different experts – an Internal Revenue Service Officer; economists, accountants, professors of the Kennesaw State University, lawyers and tax practitioners from various law firms.

The first day started with a very interesting session on viewing taxation from the perspective of Game Theory. The professor drew conclusions from the perspective of a taxpayer who has the option to decide between paying and not paying the correct tax while the tax administration has to decide between auditing a case and not auditing a case. This situation was shown to be a partial equilibrium wherein no one decision is better than the others. Hence, a probabilistic solution has to be given to this problem and the solution, which is the probability with which the taxpayer will cheat and the IRS will audit, will depend of factors like the cost of audit to the taxpayer, the penalty to taxpayer for cheating and the amount of tax owned to the state. Other important sessions on the same day were an overview of the principles of international tax treaties and transfer pricing with specific reference to the USA, an overview of the state and local taxes in the USA, the IRS whistleblower program.

Another very important session was an overview of the tax administration in the USA by Ms. Karen Russel, an Internal Revenue Service officer. She spoke in detail about the correspondance examination during the tax audit (similar to assessment proceedings in India) and the different third party sources from which information is gathered for assessment. The privacy laws are strict in the US and information flows only on a “need to know” basis among the IRS officers. She also pointed out various think tanks like the Tax Foundation, the Citizens for Tax Justice, the Center on Budget and Policy Priorities, in the area of tax policies who raise their voices by submitting reports to the Congress based on the detailed tax statistics released meticulously by the Statistics division of the IRS. We learnt that the US tax code i.e. the Code of Federal Regulations is even more detailed and complex than ours – the US income tax laws come in five voluminous books, with the total number of sections exceeding one thousand.

Almost whenever a systemic improvement is intended, we make references to the similar state of affairs in the USA. Before going to the USA, we had a theoretical understanding of the USA and its economy, people and culture but this visit to Atlanta gave us a closer peep into the actual state of affairs. Now, whenever in future, somebody makes comparisons with the US, we will have a better context and would be in a position to visualize the picture better thereby making us more capable of taking good decisions. The one-week training at Atlanta has definitely broadened my perspective.


Submitted by:-
Vikram Pagaria,
Officer Trainee, 64th Batch of IRS

During the one-week attachment here at the SARS (South African Revenue Service), i am extremely impressed by a visit at the Computer Forensics Laboratory. I am penning down my experiences below.

The highpoint for me during the attachment was a visit to the Computer Forensics Laboratory at the Large Business Center here at the SARS. The Computer Forensic Laboratory has five computer experts working who manage the entire operations for South Africa. Mr. Arvind Maharaj, a brilliant computer expert heads the laboratory. The high revenue tax-related cases which go to courts and possessing a detailed scrutiny of electronic evidence are referred to the Computer Forensic Laboratory.



The laboratory appeared to be small with only one big room and four small rooms but the discussion that followed consequently stumped us completely. We were shown the hugely powerful computers that the personnel here use for their operations. All the computers are custom-made, possessing 24 GB RAM, a 3.2 GHz quad core Intel processor and a hard disk of around 9 TB. We were then demonstrated a standard hardware device that is used for making an image of a seized hard disk or an external hard disk. The image that is made is a read-only image and hence nothing new can be over-written on these images as well as the viruses in the hard disk also do not infect the system on which the image data will be viewed. Arvind also told us that it is possible to retrieve the files which have been previously permanently deleted by the user. In fact, the current technology allows the retrieval of files which have been deleted upto seven levels e.g. if a hard disk has been formatted for six times, the data that existed on the hard disk initially could be retrieved. This was surely an eye-opener for us but others followed one after the other from Arvind in response to our questions to him.



A smart phone kit was then demonstrated to us which had around 100 different adaptors to charge a phone. It also contained a sleek device which is capable of taking a backup of all the data on the phone and the SIM cards (including data that has been deleted upto seven levels, as above) - contact details, call logs, SMS data, MMS data, photos, images, audio, video, e-mails.



Mr. Zeoline, a very enthusiastic member of the five-membered team then demonstrated us a software named FTKImager, which is used for analyzing the data in an image of a seized hard disk or an external memory. The files which have been deleted permanently could also be retrieved using this software. Additionally, those files whose file types have been intentionally modified to avoid being opened could also be easily opened in this software.



Mr. Arvind then showed us a skimmer, a device which can capture the details on a credit, debit or any other electronic card. He also said that this device is prone to a lot of misuse particularly by restaurant personnel who swipe the customers device on the device that they possess and also on this skimmer. The information stored in the skimmer device could later be retrieved by connecting it to a computer using a USB port and duplicate cards could be made.



All in all, it was a mind-boggling session. The immense knowledge and skills that Arvind and his team members possess was clearly evident in the way they responded to our bombardment of questions. The stipulated duration of the session was 30 minutes but the session continued for over an hour as a result. Finally, all of us were sent to the classroom as the next faculty was waiting.

A One Week Training Program at the South African Revenue Service (14-18 Nov 2011)

I am sorry that i have not penned anything for so long. Let me write about my experiences here at the SARS.

The one week attachment here in the Maxwell Megawatt Park has been an exceptionally great learning experience. Insights into almost all aspects of tax administration here at the SARS have been provided in the small span of four days and this surely reflects the amount of effort that the organizers Ms. Seboya Mogoba and Mr. Brandley Ngcobo from SARS International have put up under the coordination of Ms. Varsha Singh, Head of SARS International.



The sessions started with the history of SARS by Mr. Aiden Keanly, a very senior officer here at the SARS. This lecture set the context for the sessions that followed, covering aspects from tax legislation to tax administration. One key feature that was conspicuous was the vision and mission of SARS along with its mandate to modernize and reform itself continuously. Mr. Franz Tomasek, a senior SARS official who spoke on “Tax Law and Administration” pointed out that there are many different ideas that can be implemented to modernize SARS but what is vital is to prioritize and focus on four-five ideas rather than seeking up to implement all the ideas. Mr. Jerome Frey on the lecure on “Business Systems and Modernization” revealed SARS phased strategy to modernize itself in a span of seven years. This phased strategy has merits over sudden impulsive steps to change the procedures and processes of the tax administration given the fact that tax environment is itself very complicated and feedback of taxpayers and other stakeholders also need to be taken into account. These messages hold a lot of importance in the Indian context as well and there is surely a lot to learn from the way SARS has given a professional touch to tax administration, which is very unlikely a bureaucratic setup, even here at South Africa.



The highpoint for me during the attachment was a visit to the Computer Forensics Lab at the Large Business Center here at the SARS. We were shown demonstrations on how to make a read-only image of a seized hard disk, to retrieve and analyze the deleted data from a hard disk, to decrypt the files, to analyze the files whose file types have been modified, to make an image of all the data (call details, SMS, MMS, emails, photos, movies, contacts) from a smartphone, to retrieve the information on a credit/debit card etc. The Q&A session was very long and Mr. Arvind Maharaj and the five members working under him at the Computer Forensics were extremely patient to answer our queries.



There are definitely so many lessons to be learnt from SARS. The way in which modernization has been taken up in a phased and structured manner is worth emulating. The efforts of SARS in the field of tax education also are commendable. In this regard, we need to take cues from their practice of keeping the various brochures, pamphlets and similar educational material at all the libraries, national parks, malls and other public places so as to reach to the taxpayers. It was encouraging to listen to their future steps on spreading financial literacy by setting up stalls at the various malls and to include a cartoon-based chapter in the textbooks for school-children.


All in all, I am honored to be here at this training program and sincerely hope that all of us do justice to the huge amount of investment that has been done on us to send the entire delegation to South Africa. There are miles to go before we sleep !!!