US senators introduce Bill to Stop Offshore Tax Havens

Senator Carl Levin and several other senators have introduced a bill to close offshore tax loopholes and strengthen offshore tax enforcement

The 61-page Stop Tax Haven Abuse Act contains a host of measures to combat offshore and tax shelter abuses. The first section would authorize the Treasury Secretary to take special measures against foreign jurisdictions or financial institutions that impede U.S. tax enforcement. The next section would create rebuttable presumptions to help the IRS establish ownership and control of offshore entities. The third section would stop corporations whose management and control are located primarily in the United States from claiming status as foreign corporations, instead treating them as domestic corporations for tax purposes.

The bill includes proposal to increase publicly available information about multinational corporations by requiring them to include basic information on a country-by-country basis in their filings with the Securities and Exchange Commission to increase transparency and facilitate IRS inquiries into transfer pricing, foreign tax credits, and abusive offshore tax shelters.

In addition, the bill would strengthen penalties on tax shelter promoters and aiders and abettors of tax evasion by increasing the maximum fine to 150 percent of any ill-gotten gains.

However, the prospects for getting such a bill passed are slim, especially in the House, as Republican lawmakers have staunchly opposed any tax increases.