Senate Passes Amendment to Fight Offshore Tax Abuses
The Senate adopted an amendment to a larger highway transportation bill on Thursday aimed at cracking down on foreign tax havens.
Carl Levin
The amendment would allow the Treasury Department to take a range of measures against foreign governments and financial institutions that significantly impede U.S. tax enforcement. The amendment was offered by Senators Carl Levin, D-Mich., Kent Conrad, D-N.H., and Sheldon Whitehouse, D-R.I. The provisions had been part of legislation that Levin has been pushing for since 2007, most recently as part of his CUT Loopholes Act (see Senators Introduce Bill to Cut Tax Loopholes). The provisions would not be as broad as those in the larger bill, but they have raised concerns in the financial services industry.
I have fought against offshore tax havens for years, and I am glad the Senate has taken a strong step in the fight against foreign governments and offshore banks that help privileged individuals and corporations dodge taxes while the rest of Americans have to shoulder the extra tax burden, said Levin, who as chairman of the Senate Permanent Subcommittee on Investigations has conducted lengthy investigations of the damage done by offshore tax havens. Enactment of our amendment would help make our tax system more fair and would help reduce the deficit.
Advertisement
Under Section 311 of the Patriot Act, the Treasury can take a range of measures against foreign governments or financial institutions that engage in money laundering. The senators amendment gives the Treasury the same tools to combat foreign governments or financial institutions that significantly impede U.S. tax enforcement. For example, the Treasury could prohibit U.S. banks from accepting wire transfers or honoring credit cards from banks found to significantly hamper U.S. tax enforcement efforts.
"This legislation will grant the Treasury Department a new tool to stop offshore tax havens and financial institutions from gaming the system, said Conrad, who chairs the Senate Budget Committee. More must be done to clamp down on these tax havens and other schemes solely designed to get around current tax laws. This amendment is common sense and could raise nearly $1 billion to help tackle the nation's deficits and debt.
Levin noted that over the last several days, he and his co-sponsors had worked with the Obama administration and others to improve the amendment. They made changes to clarify that it covers significant impediments to tax enforcement, and that foreign jurisdictions and financial institutions that are complying with the Foreign Account Tax Compliance Act will be viewed favorably with respect to their level of assistance with our tax enforcement efforts.
Its time to put an end to offshore tax abuses that allow tax cheats to profit at the expense of honest taxpayers, said Whitehouse. Im proud to support Senator Levins amendment, which will give the U.S. Treasury greater powers to crack down on offshore tax abusers and the banks that aid them.
Levin noted that Congress took a step two years ago by requiring foreign banks with U.S investments to disclose accounts opened by U.S. persons or pay a hefty penalty on their U.S. income. That law, known as FATCA, was included as part of the HIRE Act of 2010. But Levin noted that FATCA does not apply to tax haven banks that avoid U.S. investments. The United States needs authority to take special measures against foreign banks that not only refuse to disclose accounts opened by their U.S. clients, but also significantly impede U.S. tax enforcement efforts, he said. Our amendment would enable the United States to fight back by authorizing the Treasury to tell U.S. banks to stop doing business with those aiders and abettors of U.S. tax evasion.
See original here:
Senate Passes Amendment to Fight Offshore Tax Abuses