Dan Virkstis (Baucus), (202) 224-4515
Matthew Beck (Rangel), (202) 225-8933
Jodi Seth (Kerry), (202) 224-4159
William Tranghese (Neal), (202) 225-5601
Baucus, Rangel, Kerry, Neal Improve Plan to Tackle Offshore Tax Abuse Through Increased Transparency, Enhanced Reporting and Stronger Penalties
Senate-House Proposal Detects, Deters, Discourages Overseas Tax Evasion
Washington, D.C. – Senate Finance Committee Chairman Max Baucus (D-Mont.), House Ways and Means Committee Chairman Charles Rangel (D-NY), senior Senate Finance Committee member John Kerry (D-MA) and Ways and Means Select Revenue Subcommittee Chairman Richard Neal (D-MA) today unveiled a comprehensive proposal to clamp down on tax evasion and improve taxpayer compliance by giving the IRS new administrative tools to detect, deter and discourage offshore tax abuses. Based on proposals included in President Obama’s 2010 Budget, on legislation proposed by Senator Carl Levin and Representative Lloyd Doggett, and a draft released by Senator Max Baucus, the Foreign Account Tax Compliance Act would force foreign financial institutions, foreign trusts, and foreign corporations to provide information about their U.S. accountholders, grantors, and owners, respectively. The nonpartisan Joint Committee on Taxation has estimated the provisions of the Foreign Account Tax Compliance Act would prevent U.S. individuals from evading $8.5 billion in U.S. tax over the next ten years.
Senator Baucus and Congressman Rangel consulted extensively with the Department of the Treasury, the Internal Revenue Service (IRS), the Joint Committee on Taxation (JCT) and industry stakeholders to ensure the proposal accurately represents industry practices and will be able to meet current IRS compliance and enforcement needs.
“Last March, I circulated a preliminary draft of offshore compliance legislation to obtain stakeholder input to make the proposal even stronger, more durable and more likely to become law. The proposal offered today is the culmination of that effort and represents the best ideas from both the House and the Senate on how to strengthen IRS resources to root out tax cheats once and for all,” Baucus said. “These tax evaders cost our country tens of billions of dollars every year in unpaid taxes, and honest, law-abiding taxpayers pay the price. Not only is this practice fundamentally unfair, this is money that could be used in any number of other important areas, such as reducing our fiscal deficits.”
“This bill offers foreign banks a simple choice – if you wish to access our capital markets, you have to report on U.S. account holders,” said Ways and Means Committee Chairman Rangel. “I am confident that most banks will do the right thing and help to make bank secrecy practices a thing of the past.”
“When I first came to the Senate, I investigated the murky and opaque network that allows people to hide assets abroad and evade U.S. tax laws. Decades later, we still have work to do, but this long overdue legislation is a step forward,” said Sen. Kerry. “It will prevent another UBS and strengthen taxpayer compliance. The Treasury Department’s efforts to improve how we share tax information with other countries and the compliance provisions in this bill will help crackdown on the bad actors who try to hide funds offshore instead of playing by the rules.”
“This bill is a continuation of my efforts to reduce tax evasion by American citizens and bring more transparency to international banking. Last March, I held a hearing in the Subcommittee on Select Revenue Measures addressing the nexus between bank secrecy and tax avoidance. With billions of dollars in U.S. tax revenue being lost each year due to uncooperative foreign financial institutions, it is clear the issue is reaching its tipping point. The demand for standards on bank secrecy has even gone international, with British Prime Minister Gordon Brown calling for the beginning of the end of tax havens. As a longtime critic of U.S. individuals and companies engaging in unlawful foreign tax avoidance, I believe this bill provides the Treasury Department with the tools it needs to crack down on those Americans hiding assets overseas,” said Ways and Means Select Revenue Subcommittee Chairman Neal.
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