How does Information Exchange help to combat international tax avoidance?

International tax avoidance occurs when people and businesses try to reduce their tax liability by transferring and hiding income and profits across international borders. Information exchange is an important tool to help combat this type of behavior. Information exchange is the sharing of financial information between two countries. It allows organizations like the IRS to exchange data with foreign countries and identify people who are avoiding taxes by not reporting foreign income. This information is used to assess taxes and enforce compliance with tax laws. For example, under U.S. law, U.S. citizens and residents must report their foreign financial accounts to their government. Unreported income and profits can lead to large fines, criminal charges, and even jail time. By exchanging information with foreign governments, U.S. authorities can more easily identify and pursue individuals and organizations that are attempting to avoid taxes. In Texas, the State Comptroller’s Office is responsible for collecting taxes and enforcing the state’s tax laws. The Comptroller’s Office is a member of the International Compliance Enforcement Network, which is a group of state tax agencies that share information about international tax avoidance. Through this network, the Comptroller’s Office can access information about individuals and companies in multiple foreign countries who are attempting to avoid their tax liabilities. The ability to share information between the United States and other countries is an essential tool in combatting international tax avoidance. Through information exchange, state and federal organizations have access to more information, allowing them to more effectively identify and pursue tax evaders.

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How does Information Exchange help to combat international tax avoidance?

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