The NADTree Team.

Editorial Committee Managing Editor Editorial Advisors

Ridhima, Sanyam, Sangram, Malvika, R Ravichandran N Jayasankar

Aastha Additional Director General-II Additional Director (Faculty)

(Officer Trainees,64th Batch of IRS) Sanjay Joseph

Newsletter Design: Ridhima Deputy Director (Faculty),

For any Correspondence /Queries, kindly contact Dr Vinay Kumar Singh, Additional Director ( Library), National Academy of Direct Taxes, Chhindwara Road, Nagpur— 440030. Tele-fax 0712-2584350; E mail– newsletter@nadt.gov.in

(Printed by the Printing & Publication Unit, NADT, Nagpur for the National Academy of Direct Taxes, Nagpur)

To,

Page 6| Newsletter| Special Issue

Newsletter– Special Issue

T he officer trainees of the 64th Batch of the Indian Revenue Service were

put through a intensive 5-day course. The sessions conducted over a five-

day period were highly interactive and provided sound technical inputs

into different subject areas such as transfer pricing, international taxation, change

management, tax policy and possibilities of innovation in tax administration. In-

sightful sessions were also conducted to help the Officer Trainees understand the

nuances of the Internal Revenue Code, which is the major tax related legislation

for the Internal Revenue Service, and also draw parallels with the tax systems and processes of Direct Tax Ad-

ministration in India.

The introductory session was conducted by Dr. Brett on “Game Theory and

Taxation”. The discussions explored how Game Theory, which a highly popular

intuitive concept used across various disciplines, can be used to predict taxpayer

behavior to help economise and streamline tax administration. The session was

thought-provoking and provided the Officer Trainees with a sound fundamental

understanding of the concepts of Game Theory

and their applicability to the tax administration.

The second lecture was delivered by Mr. Shyam

Reddy, who heads

the General Ser-

vices Administration for the eight (8) South-

eastern states of the USA. Being a presiden-

tial appointee, Mr. Shyam Reddy not just

brought greetings from the US President

but also explored the vari-

ous areas of cooperation in

the US-India relationship and the role that the young bureau-

crats could play to further this relationship during their career.

In the last session of the first day, Prof. Cleary led the Officer Trainees through the finer

points, broad concepts and technicalities involved in the formulation and operationalization of

international tax treaties. He discussed the key components of such treaties, the principles of

interpretation, general treaty obligations, exceptional cases and emerging issues in the dy-

namic field of international taxation.

Karen Russell in a very informative session discussed assessment, audit and appeals in the US’ system of taxation.

She explained the processes and systems such as Correspondence Examination, the Automated Underreporter and

notice progression where she highlighted the various notices and letters sent to taxpayers by the authorities. She

also elaborated upon the criteria for selection of cases for examination, the concept of refundable credits and other

emerging issues in taxation.She especially emphasized that the audit at all times tries to provide a hassle-free ex-

perience to honest taxpayers and promote voluntary compliance even as it seeks to penalize the dishonest ones.

What stood out was the efforts made at every stage of the process to keep the taxpayer involved, whether actively

through consultation or through background work by providing information about the different steps in taxation.

At KSU, Georgia!At KSU, Georgia!At KSU, Georgia!At KSU, Georgia!

NADTree

From �ADT to KSU….

T he Officer Trainees had a valuable learning experi-

ence hearing the various speakers during the training

programme. The NADTree team had an opportunity

to have a chat with the speakers. Presented here are a few

excerpts from the interviews. The NADTree team would espe-

cially like to thank Prof. Govind Hariharan for helping us in

this endeavor.

Mr. Kurt Schulzke made a presentation on the

IRS’ Whistleblower Programs, which is comparable to the system of Tax

Evasion Petitions (TEPs) in India. He highlighted that while there was a definite structure in place to in-

volve the general public in detecting tax frauds and identifying tax evaders, in practice the Whistleblower Programs

had a low impact and there was tremendous scope for improvement. He discussed how the system needs to be more

proactive to realize the full potential of such programs and also to plug legal lacunae such as the absence of any anti-

retaliation provisions for the whistleblowers.

Day 3 began with a lecture by R. Mark Williamson on Tax Treaties with special emphasis on individuals. In the

lively interaction, Mr. Williamson delineated the various groups of individuals covered by tax treaties and the special

treatment accorded to them in these treaties. He also emphasized how even after such minute detailing, tax treaties

still need to be continuously modified to cover newly emerging employment categories.

Thereafter, Mr. Luke Knoiscent delivered a talk on ‘Using Tax data for Tax Policy and Transparency in the US Fed-

eral Tax System’. In this session, the focus was on the key structures and systems in the USA such as the Statistics

of Income (SoI) Office and the Office of Tax Administration (OTA) which were involved in utilizing income-related

statistical data to design rational tax policies. This lecture gave useful pointers to the Officer Trainees on efficient

tax-related data collection & dissemination, ascertaining the reliability of statistical data and most importantly on

understanding the economic psychology of tax behavior in order to design a good tax system.

The next session was held by Mr. Robert Verzi who talked about Transfer Pricing issues in the US. Mr. Verzi ex-

plained in detail the various methods, such as the Comparable Uncontrolled Price method among others, used to de-

termine the Transfer Pricing valuations. He then explained how the US follows the ‘Best Method Rule’ to arrives at

the exact Transfer Pricing Value. In the process, he also gave inputs on the various methods used by business enti-

ties to avoid their tax liabilities in the US, such as shifting the holding companies to tax havens. He also talked

about Google’s famed ‘Double Irish Structure’ of operations which enables it to reduce its worldwide tax liability.

The Officer Trainees had a pleasant surprise lined up on Day 4 – the Consul General of India (Emeritus), Mr. Ken-

neth Cutshaw, interacted with them for a while, sharing his experiences. Thereafter they were regaled by Prof. Srid-

har Ramamoorti who spoke on ‘Leadership, Ethics and Change’. In his inimitable style, Prof.Ramamoorti regaled the

Officer Trainees with his experiences. He spoke about their role as leaders and innovators and explained how they

could most effectively perform them – by being agents of change and not merely the beneficiaries.

This was followed by Laura Clauser who spoke on Transfer Pricing. By using the example of Bollywood and its over-

seas activities, she explained to the Officer Trainees the intricacies of Transfer Pricing of intangibles. This being an

emerging field, she also talked about the need to constantly stay updated and alert to the newer mechanisms used by

companies to escape their tax obligations.

The final lecture of this programme was delivered by Ms. Tina Chunn, who in her typical Alabama accent explained

the system of State and local taxation in the US. While acknowledging that the system was very complex, thus creat-

ing hardships for businesses in America, through her talk she also clarified how the states and local authorities had

clearly defined areas of taxation in most instances and how their financial independence was strictly protected. Her

talk also made the Officer Trainees aware of the benefits of the Indian system of tax sharing from the point of view of

industry.

The tranining program ended on Friday, November 11, 2011, with a test conducted on the sessions held during the

program followed by a visit to the Kennesaw State University which was instrumental in organizing this entire pro-

gram.

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From the Speakers...

Ms. Chunn is a senior manager with HA&W’s Tax Research Group. She has over 18

years of experience assisting companies and their owners to minimize their tax liabil-

ity and maximize their profitability.

Q: Can you elaborate on the nature of your current work?

Ms. Chunn: I work with companies to ensure that they become tax compliant and

that they understand tax impact. I also work with the State Revenue Audit Agents.

Q: How can the the taxation systems of various states be simplified?

Ms. Chunn: Everyone is trying to move towards a flat tax. But because people al-

ways find ways to avoid their tax liability, the government has to continuously in-

vent new ways to tax. So in a way it is difficult to simplify this system.

Q: How important is such kind of training to enhance the efficiency of the tax admin-

istrators?

Ms. Chunn: Such kind of training is pivotal to enhance tax collections. But given the nature of the job, tax adminis-

trators have to think on their feet and adapt to the circumstances. Hence, ‘on-the-job’ learning is also essential. On

the whole, a tax administrator should handle at least three audits (assessments) before completion of training.

Q: Based on your interaction, how would you describe this batch of the Indian Revenue Service?

Ms. Chunn: I’ve had a very limited interaction with you, but I would say that this is a very vibrant and energetic

batch of officers.

(Ms. Chunn spoke to Ms. Ridhima Vasisht and Sangram Jagdale, officer trainees of the 64th Batch of Indian Revenue

Service)

Page 5| Newsletter| Special Issue

Ms. Tina Chunn

Enchanting Atlanta! The Officer Trainees thoroughly enjoyed their stay in Atlanta and it was made even more special by the various pro-

grams and sightseeing tours that were organized to welcome them. On Sunday, the 6th of November, the Officer

Trainees attended a cultural programme dedicated to the Legend Shammi Kapoor in which mostly the Indian com-

munity in Atlanta participated and sang some of the popular songs of the actor. The singers were quite professional

and the audience thoroughly enjoyed and danced to the tunes of songs from movie ‘Teesri Kasam’.

On Monday, the officer trainees went to CNN where they were shown how the broadcasts are done, and how the

journey of CNN from a nascent cable news channel, to one of the most popular TV channels in the world was carried

out. The officers were all excited to see how weather forecasts are made with the help of green screens and the new

studio of CNN that was equipped with the latest gadgets. The officers also went to Coca Cola, where they tasted dif-

ferent flavors of coke from across the globe.

However the most awaited event was the visit to Georgia Aquarium which was on 9th November 2011.The aquarium

is one of the largest aquariums of the world with vast variety of fish brought from tundra, tropical and equatorial

ecosystems. Officers also got an opportunity to see the Dolphin Show that left an indelible mark on the memory of

most of them. After that the group also went to the Stone Mountain Park which had one of the oldest gigantic gran-

ite structures.

The Cultural Programme presented by the officer trainees of the 64th batch of IRS was a treat for all those who wit-

nessed it. Starting with the Bharatnatyam Prayer Dance by Nithya V, officer Trainee of 64th batch, Gazal songs and

folk songs left the audience spell bound and the exhilarating Bhangra dance performed by the Officer Trainees made

everybody give them a standing ovation.

Lastly, on the 10th, the officers went to see the headquarters of UPS, where they were given valuable inputs on how a

multinational transport corporation handles its Transfer Pricing Obligations. The Officer Trainees got to see the

model of the first UPS truck that delivered parcels and got to take a tour of the beautiful building that houses the

offices of the UPS.

All in all, it was a once in a life time experience that the Officers would remember for the rest of their lives.

Page 4| Newsletter| Special Issue

Mr. R. Mark Williamson

Mr. Kurt S. Schulzke Kurt Schulzke is Associate Professor of Accounting & Business Law at the

School of Accountancy at Kennesaw State University

Q: Sir, in India we have procedures like search and seizure, which are exten-

sive powers given in severe cases of tax evasion. Are there any comparable

powers available with the Internal Revenue Service?

Mr. Schulzke: Yes, we have powers of seizing the assets of tax payers but in

such cases the IRS privately approaches the courts and obtains warrants.

Agencies such as the FBI are also involved in such cases.

Q: How are complaints against errant IRS officers handled?

Mr. Schulzke: Well, we have an IRS Ombudsman to deal with such cases.

Q: Finally Sir, what are your views on such training programmes?

Mr. Schulzke: It is a wonderful opportunity for young officers such as your

batch to observe the best practices in other countries and make informed

choices when dealing with the changing circumstances.

(Mr. Kurt Schulzke spoke to Ms. Malvika Garg and Sangram Jagdale, Offi-

cer Trainees of the 64th Batch of IRS)

Mark Williamson is a partner and co-chair of Alston & Bird’s Wealth Planning

Group. He is a fellow of the American College of Trust and Estate Counsel and

practices in the areas of estate planning and federal taxation.

Q: Mr. Williamson, what are your views about India’s role in the world econ-

omy?

Mr. Williamson: India is definitely one of the leaders of the emerging market

economies. Its partnership with the USA has re-defined the contours of the

world economy. In this context, I feel that the India, China, America (ICA) In-

stitute is playing a pivotal role in encouraging a long-term partnership be-

tween these world leaders through the organization of such interactive pro-

grammes at multiple levels.

Q: Can you elaborate more on your views about such training programmes for

the young officers of the Indian Revenue Service?

Mr. Williamson: I think such programmmes are essential to have multi-faceted discussions and generate a fair num-

ber of new ideas that can acts as pointers to a new direction of thought.

Q: How would you describe the Officer Trainees of the 64th Batch of Indian Revenue Service who are undergoing

their training here?

Mr. Williamson: I think that they are a very interactive group and hope that they would take away some useful

pointers from the discussions here. I personally found this session with them an enriching experience.

(Mr. R. Mark Williamson spoke to Ms. Malvika Garg and Sangram Jagdale, Officer Trainees of the 64th Batch of the

Indian Revenue Service)

Q: Sir, can you tell us more about the General Services Administration (GSA)

and the work it is involved in?

Mr. Reddy: GSA deals with arranging government procurements through blan-

ket purchase agreements, real estate development through building court houses

and general infrastructure development. It is also concerned with running the

websites of the different arms of the government and in general ensure an opti-

mum supply of goods and services to government agencies.

Q: In your speech, you mentioned that the GSA deals with the IRS. Could you

elaborate more on this relationship?

Mr. Reddy: Well our relationship with the IRS is not in the realm of its func-

tions. It relates more to its miscellaneous requirements. Being the sole owners of

vast real estate, we provide the IRS with office space it needs. We also ensure

that the IRS has uninterrupted availability of office supplies. We do this mainly

by centralized procurement and acting as a convenience store for all the government departments. We also provide

the IRS with the fleet of vehicles it needs for its operations.

Q: Based on your interaction, what are your views about the Officer Trainees of the 64th Batch of Indian Revenue

Service?

Mr. Reddy: Well, I think I have met and interacted with the best and brightest of India, and hope that you will take

the best experiences from this training programme and thereby enrich Indian society and aid India’s development.

All the best.

(Mr. Shyam Reddy spoke to Ms. Aasta Madhur and Sanyam Joshi, Officer Trainees of the 64th Batch of IRS)

Q: Sir, can you tell us about the nature of you work?

Mr. Brett: Currently I am working with the US government in working out the mo-

dalities for auctions for their MediCare Program. We told the government that while

auctioning was a good idea to ensure affordable medical services, the bidding process

itself was flawed. So we are working on designing a better bidding process.

Q: Can you tell us about the various academic positions you have held in your career?

Mr. Brett: I was a Professor in the University of Miami for 8 years and currently I am

associated with the Kennesaw State University.-

Q: Sir, to what extent does research influence policy-making within the USA govern-

ment?

Mr. Brett: It is true that in the initial stages of policy formulation the policy-makers take account of the statistical

data and the extensive research. However, once a policy is put into place, it becomes difficult to change or modify it

based on relevant research. As a colleague of mine says it’s kind of like ‘steering the Titanic”.

Q: Sir, what is the level of influence of concepts like Game Theory in the Internal Revenue Service?

Mr. Brett: Once a government institution is set in its ways it’s not an easy task to suggest new ideas, new changes.

There is a lot of scope for improvement in the level of research as it stands presently.

Q: As a final question, what are your views on initiatives like the ICA-KSU Training Program which is being con-

ducted for the Officer Trainees of the 64th Batch of the Indian Revenue Service?

Mr. Brett: I think it is a very good idea. At the entry level if one gets such kind of exposure then it will definitely en-

courage one to think in new directions before being engulfed by the procedural rigidity of the system.

(Prof. Katzman spoke to Ms. Aastha Madhur and Mr. Sanyam Joshi, Officer Trainees of the 64th Batch of Indian

Revenue Service)

Page 3| Newsletter| Special Issue Prof. Brett Katzman

Mr. Shyam Reddy