Tax Treaty Case Law around the Globe 2012

United States: Exchange of Information and Taxpayer Protection

27.1. Introduction

Aloe Vera is a unique reported case in this volume, as it had not yet been decided in 2011. Nonetheless, it is significant because summary proceedings took place regarding issues of the scope of exchange of information clauses in US tax treaties. The increased importance, volume and intensity of the global exchange of taxpayer information naturally augment fear about the risks of improper use of that information. This is especially significant in the United States, which has been the primary promoter of more comprehensive information sharing pursuant to tax treaties and insists on the inclusion of appropriate clauses in all of its own tax treaties. To alleviate taxpayer concern, the government promised appropriate safeguards from routine exchange of information, and separate examination of the circumstances of each case. In the United States it is believed that taxpayer information is kept rather confidential, yet once information is shared with other tax authorities, and shared in a rather unmonitored manner, such confidence seems to disappear. Aloe Vera is the primary recent case dealing with this iss...