Exclusive-U.S. suspends tax information exchange with Russian authorities

© Reuters. FILE PHOTO: Russian and U.S. flags are pictured before talks between Russian Deputy Foreign Minister Sergei Ryabkov and U.S. Deputy Secretary of State Wendy Sherman at the United States Mission in Geneva, Switzerland January 10, 2022. REUTERS/Denis Balibo

By David Lawder

WASHINGTON (Reuters) -The U.S. Internal Revenue Service has suspended information exchanges with Russia’s tax authorities in a bid to hamper Moscow’s ability to collect taxes and fund its war against Ukraine, the Treasury Department told Reuters on Tuesday.

Under a 30-year-old tax treaty, the IRS and Russia’s Federal Tax Service have shared information to aid domestic tax collections and enforcement of tax laws in both countries. The IRS can request information about U.S. taxpayers from Russian authorities and vice-versa.

The Treasury said it has not shared any tax information with Russian authorities since Russia’s invasion of Ukraine began on Feb. 24, but the action disclosed on Tuesday formalizes the suspension.

“This ensures that the United States is not providing any information that could contribute to the enrichment of the Russian government through increased tax collections or facilitating in any way the persecution of Russian dissidents or the targeting of Ukrainian citizens or businesses,” the Treasury said in a statement to Reuters.

The move stops short of suspending the entire tax treaty with Russia, a step that U.S. Senators Rob Portman and Ben Cardin had requested https://www.portman.senate.gov/sites/default/files/2022-03/Russia%20Tax%20Convention%20Letter%20to%20President%20-%20FINAL.pdf President Joe Biden take in addition to suspending the information exchange.

Britain, which in recent years had become a haven for wealthy Russian elites, said last month that it had halted tax information exchanges with Russia and Belarus, which is an ally of Moscow.