Monday, March 2, 2015

Follow up to class today: DOJ Tax Division's Offshore Compliance Initiative

For everyone interested in numbers surrounding the offshore accounts debate today, the DOJ Tax Division's Offshore Compliance Initiative provides a basic overview and links to a 2008 Senate hearing report title Tax Haven Banks and U.S. Tax Compliance.*

The background section from this report (page 17), begins with "Each year, the United States loses an estimated $100 billion in tax revenues due to offshore tax abuses. These funds represent a substantial portion of the annual U.S. tax gap, which is the difference between what U.S. taxpayers owe and what they pay, most recently estimated by the IRS at $345 billion."

The footnote to the first sentence cites numerous studies that were used to construct the $100 billion estimate. Perhaps someone with a bit more time/interest would follow that rabbit hole and determine the legitimacy of that estimate. For others interested in how tax avoidance/money laundering works this source provides a helpful explanation (Who's Watching Our Back Door, page 26).

On another note, if you go to the Homeland Security & Governmental Affairs' Permanent Subcommittee on Investigation's and search for "offshore accounts" a report titled Offshore Tax Evasion: The Effort to Collect Unpaid Taxes on Billions in Hidden Offshore Accounts from a 2/26/2014 hearing will pop up.* I skimmed the executive summary and it discuses US policies directed at and actions taken against Swiss Banks, which is another facet of the tax avoidance conversation.

*I can't link to the actual PDF's so hopefully these directions will help you find them.

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