On Sept. 16, the Internal Revenue Service and state tax officials announced the establishment of a nationwide partnership to combat "abusive tax avoidance."

Forty states (see below) and the District of Columbia joined the IRS today in announcing the agreements, and more states are expected to sign the agreement in the weeks ahead.

Under the partnership, the IRS will exchange information about abusive tax avoidance transaction leads with participating states, which will help the agencies avoid duplication.

The states and the IRS will then share information on any resulting tax adjustments, which is expected to reduce duplication of lengthy taxpayer examinations by both a state and the IRS.

According to IRS Commissioner Mark W. Everson, the move "effectively extends the resources of the IRS and the states.”

The agreement, known as the "Abusive Tax Avoidance Transactions" memorandum (ATAT), was negotiated over the past year between the IRS and several state tax agencies. It focuses solely on abusive tax avoidance transactions, and leaves procedures governing communication on more routine taxpayer compliance efforts unchanged.

According to Everson, this maintains the separation of federal and state tax authority and protection of taxpayer privacy. “We treat taxpayer privacy as a top priority,” said Everson. “The information shared under this agreement will be strictly limited to that pertaining to abusive transactions.”

The list of participating states is as follows:

Alabama

Arizona

Arkansas

California

Connecticut

District of Columbia

Georgia

Florida

Hawaii

Idaho

Illinois

Indiana

Iowa

Kansas

Kentucky

Louisiana

Maryland

Massachusetts

Minnesota

Mississippi

Missouri

Montana

New Hampshire

New Jersey

New Mexico

New York

North Carolina

North Dakota

Ohio

Oklahoma

Oregon

Pennsylvania

Rhode Island

South Carolina

South Dakota

Utah

Vermont

Virginia

Washington

West Virginia and Wisconsin.

 

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