The Sales Tax Gap Challenge
Agency resource limitations, increasingly sophisticated POS sales suppression technology, under-reported sales, non-filers and even sloppy merchant accounting practices all contribute to the difficult task of identifying, quantifying, and collecting the hundreds of millions of dollars in unpaid sales tax.
The Transfer Pricing Gap Challenge
Borders create problems for tax authorities by placing part of a taxable transaction outside their jurisdiction, creating an environment conducive to tax avoidance and evasion through the manipulation of transfer pricing. Companies use illegal transfer pricing techniques to move capital from one country to another for tax evasion and money laundering.
Quantifying the Revenue Impact
- $431 Billion In Sales Tax Collected Across U.S.A. in 2015
- Impact of Underground economy & Zappers = 8.8% of GDP ($1.7 Trillion)
- Approximately $70 billion in uncollected Sales Tax Revenue
- Annual Transfer volume of $893B in the U.S.A. with approximately $269B that was under reported to IRS/Customs in 2014 just in the Top 10 states in the U.S.A.
- IRS and States are focused on multinationals with limited controls on smaller transactions. IRS cases closed during 2012-2014 yielded only $9.83B of the potential transfer pricing assessments against the $269B in fraud
Current resources and tools unable to keep pace
Typically, tax agency teams are equipped to track less than 0.10% of all businesses within their domain. Traditional, rules-based tools designed to automate these efforts have limited abilities and even contribute to agency inefficiencies by generating false positive rates as high as 40%. More recent attempts to re-purpose technology originally designed to Identify instances of social services benefits abuse, insurance and income tax fraud fail to deliver tangible results.
Automating the Process for Closing the Tax Gap
- Tax agency shares tax filing and other client agency-controlled data with G2Lytics.
- G2Lytics combines client agency data with large volumes of relevant 3rd party data.
- The G2Lytics nForce™ uses advanced data analytics to categorize, layer and organize the data.
- G2Lytics nForce™ employs Artificial Intelligence to generate detailed, merchant specific reports identifying and quantifying outstanding tax obligations.
- G2Lytics and client agency conduct quarterly assessments to measure program performance and resulting compliance levels.