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Offshore tax evasion getting added attention

Congressional interest in the use of foreign accounts to avoid U.S. taxes has moved beyond the traditional tax-writing committees.

The Senate's Homeland Security and Government Affairs Committee also is getting in on the act. Its Permanent Subcommittee on Investigations is focusing on alleged tax evasion by the wealthy via offshore accounts set up by UBS and LGT, a banking company controlled by the royal family of Liechtenstein. You can read my previous bloggings on this global tax evasion investigation here, here and here.

Tax_shelter_tent The Subcommittee has issued a 115-page report and, as I type, is holding a hearing on the matter. As part of the hearing, the Subcommittee also has produced a 362-page exhibit list related to, according to the hearing notice, how "financial institutions located in offshore tax havens, including Liechtenstein and Switzerland, may be engaged in banking practices that could facilitate, and in some instances have resulted in, tax evasion and other misconduct by U.S. clients."

In addition to the voluminous paperwork, testimony will come from IRS Commissioner Douglas Shulman and a top Justice Department representative, as well as subpoenaed U.S. taxpayers who allegedly maintained such accounts.

The session also will include, according to the New York Times, videotaped testimony from an LGT whistleblower who is in the witness protection program and is reportedly being sought by private detectives hired by the royal family of Liechtenstein.

Havens huge cost to U.S. Treasury: According to the Subcommittee's report, the U.S. loses about $100 billion each year to offshore tax shelters. About 19,000 accounts at UBS are held by Americans, accounting for an estimated $18 billion to $20 billion in assets sheltered in Switzerland. The report says investigators weren't able to obtain data about LGT, but noted that the IRS has identified at least 100 accounts with U.S. clients at the Liechtenstein bank.

Carl_levin_2 Subcommittee Chairman Carl Levin (D-Mich.) is looking to the hearing and report to bolster his efforts to require added disclosure by banks.

"Tax havens are engaged in economic warfare against the United States, and the honest, hardworking American taxpayer is losing," said Levin. "The iron ring of secrecy around tax haven banks and their deceptive banking practices enable and encourage tax cheats to hide assets from the United States. Congress needs to enact strong penalties on tax haven banks that help U.S. taxpayers avoid paying taxes to Uncle Sam."

In addition to the New York Times story, you can read more about the Senate report and hearing in the Wall Street Journal and the Financial Times.

Official Senate material includes the witness list, with links to prepared testimony; the report and the exhibit list.


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