Abusive Tax Schemes
Through his role on the Permanent Subcommittee on Investigations, Senator Levin continues to lead investigations into abusive tax shelters and offshore tax havens used by businesses and individuals to dodge payment of their U.S. taxes.
Offshore tax havens and secrecy jurisdictions today hold trillions of dollars in assets. While these jurisdictions claim to offer clients financial privacy, limited regulation, and low taxes, too often these jurisdictions have instead become havens for tax evasion, financial fraud, and money laundering. A sophisticated offshore industry, composed of a cadre of international professionals including tax attorneys, accountants, bankers, brokers, corporate service providers, and trust administrators, aggressively promotes offshore jurisdictions to U.S. citizens as a means to avoid taxes and creditors in their home jurisdictions.
These professionals, many of whom are located or do business in the United States, advise and assist U.S. citizens on opening offshore accounts, establishing sham trusts and shell corporations, hiding assets offshore, and making secret use of their offshore assets here at home. Experts estimate that Americans now have more than $1 trillion in assets offshore and illegally evade between $40 and $70 billion in U.S. taxes each year through the use of offshore tax schemes. U.S. corporations are estimated to illegally evade another $30 billion in taxes each year through offshore tax dodges. America 's working people bear the burden of this $100 billion tax gap.
In November 2003, the Subcommittee held two days of hearings that pulled back the curtain and provided an inside look at how respected accounting firms, banks, investment advisors, and lawyers have become high-powered engines behind the design and sale of abusive tax shelters. The hearings and an associated report found a corporate culture that pressured CPAs and lawyers to become tax product salespersons, pushed executives to sell, sell, sell to meet revenue goals, and overruled the few who didn't want to go along.
In August 2006, the Subcommittee held the latest of its hearings to expose and combat abusive tax practices. An associated report detailed six case histories that revealed how Americans use offshore trusts, corporations, and tax shelters to evade payment of their taxes. In one case history, two brothers built a network of 58 offshore trusts and corporations to avoid paying taxes on hundreds of millions of dollars in income. In another case history, two billionaires, using offshore corporations, staged a fake sale of securities to avoid paying taxes on more than $2 billion in income. The Subcommittee report makes a number of recommendations to combat these abusive tax practices.
Senator Levin’s Record on Abusive Tax Schemes
- Feb. 7, 2012 – Sens. Levin, Conrad introduce CUT Loopholes Act
Sen. Levin and Sen. Kent Conrad introduce the Cut Unjustified Tax Loopholes Act, which would close a number of tax loopholes that increase the deficit and the tax burden carried by middle-class Americans by allowing individuals and corporations to dodge the taxes they owe.
- March 8, 2012 – Levin-Conrad amendment cracks down on offshore tax loopholes
The Senate adopts an amendment offered by Sen. Levin, Sen. Kent Conrad and Sen. Sheldon Whitehouse that adds important new tools to the fight against offshore tax abuses that increase the budget deficit and disadvantage middle-class taxpayers.
- Feb. 29, 2012 – Levin speaks out against ‘Facebook loophole’
In a speech on the Senate floor, Sen. Levin outlines how Facebook will avoid billions of dollars in corporate taxes using a loophole related to the granting of stock options to employees. Levin has long sought the closing of this stock-option loophole to reduce the budget deficit.
- Jan. 26, 2012 – Levin criticizes IRS role in boosting commodities speculators
At a Permanent Subcommittee on Investigations hearing, Sen. Levin outlines how the IRS, through a series of private rulings, has allowed mutual funds to skirt legal limits on commodities trading and contributed to the market speculation that increases prices for oil and other commodities.
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