The Internal Revenue Service (IRS) commissioner admits it—superrich taxpayers are using accounting tricks to avoid paying their full share of taxes, and they’re getting away with it.
Thousands of executives with financial reporting responsibilities use the Comperio on-line library to access the type of information and interpretive guidance PricewaterhouseCoopers' own professional audit staff use around the world. Key content areas include guidance from the FASB, EITF, PCAOB, SEC, and others as well as PwC's interpretive guidance. Get more information and sign up for a complimentary 30-day trial.
"We have real difficulties finding out what's going on," IRS Commissioner Mark Everson told senators Tuesday. "Our challenges are acute and ever-growing. Offshore abuses are a real problem."
Everson was testifying before a subcommittee of the Senate Homeland Security and Governmental Affairs Committee, which spent a year investigating offshore tax shelters and determined that they allow some wealthy Americans to avoid paying $40 billion to $70 billion in taxes each year.
The top Democrat on the subcommittee, U.S. Sen. Carl Levin, (D-Mich.), said, “The universe of offshore tax cheating has become so large that no one, not even the United States government, could go after all of it,” the New York Times reported.
Much of the testimony focused on the attorneys, accountants and financial advisers who guide the taxpayers through the intricacies of moving money offshore to Belize, the British Virgin Islands, the Cayman Islands, Panama, and other countries that promise anonymity to those doing business there, the Associated Press reported.
The 400-page subcommittee report said the schemes wouldn’t work without cooperative lawyers and financial institutions that allow access to money stashed overseas through credit and debit cards in the United States.
Levin said securities and money laundering laws should be changed so that the burden of proof is on the taxpayer. He said the law “should assume that any transaction in a tax haven is a sham.” For example, U.S. citizens with money in a trust or corporation in a country known to the Treasury Department to be a tax haven would have to prove the money should not be taxed.
The arrangements are broken down into separate parts, with separate advisers working on them, so that when the scheme is determined to be improper, the advisers can say they had no idea of the big picture. The schemes rely on “complexity, secrecy and compartmentalizing information,” the Times reported.
"These outrageous tax haven abuses are eating away at the fabric of our tax system, and it is long, long past time to shut them down," Levin said.
For more information about Congressional actions affecting the IRS, see "Extra Funding Leads to Layoffs at IRS".