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