Tax haven draft bill would double offshore penalties

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Tuesday, 17 March 2009 11:08

Max Baucus, the US Senate Finance Committee Chairman, is proposing legislative changes that could double certain penalties on US citizens who use offshore accounts to evade taxes. Baucus also suggests that the American Internal Revenue Service should be given enhanced powers to detect offenders.

The proposals are not as drastic as those proposed on 2 March by Senator Carl Levin that garnered support from the new Obama administration.

Baucus’s proposals demand that foreign banks that permit customers to trade in US securities will be required to provide more details of account holdings to the Internal Revenue Service. It would double to six years the length of time the IRS may pursue back taxes.
It would also require US citizens to include with their tax returns a form revealing the contents of foreign bank accounts with deposits of more than $10,000.

Levin had proposed a dozen laws to stop what he claimed to be a loss of $100 billion annually in taxes on income held in offshore accounts. The legislation was supported by the American Treasury Secretary Timothy Geithner.

Baucus’s draft legislation did not state the size of the penalties. Levin’s proposals would require hedge funds to put in place anti-money-laundering programmes to enhance tracking of offshore investors. His bill would also force foreign companies that are managed and controlled in the US to pay taxes on the same basis as a domestic company.