Offshore Tax Haven Abuses That Cost U.S. Taxpayers

WASHINGTON – At a hearing entitled, Tax Haven Abuses: The Enablers, The Tools & Secrecy, the Senate Permanent Subcommittee on Investigations will expose how offshore and U.S. professionals are helping U.S. citizens move assets offshore and dodge U.S. taxes, adding to tax haven abuses that cost U.S. taxpayers an estimated $40 to $70 billion dollars each year.

A year-long bipartisan Subcommittee investigation examined six case studies illustrating the operation of the offshore tax industry, its service providers and clients, and how tax haven abuses are undermining, circumventing, or violating U.S. tax, securities, and anti-money laundering laws. Subcommittee Chairman Norm Coleman (R-Minn.) and Ranking Minority Member Sen. Carl Levin (D-Mich.) will release a 370-page joint staff report detailing the findings of the investigation.

“Offshore tax havens hold trillions of dollars in assets supplied by high-net-worth individuals around the world,” Levin said. “Our investigation blows the lid off tax haven abuses that use sham trusts, shell corporations, and fake economic transactions to hide the fact that U.S. citizens are controlling offshore assets, circumventing U.S. legal requirements, and dodging taxes. 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. Tax havens have, in effect, declared war on honest U.S. taxpayers, and we’ve got to fight back utilizing the full legislative, executive, and administrative powers of the United States government.”

“Using offshore jurisdictions to shelter income is unfair and I intend to fix this problem,” said Coleman. “Offshore tax havens and secrecy jurisdictions are used to hold trillions of dollars in assets that are out of reach from taxation. I'm particularly troubled by an industry of tax professionals, lawyers, trust specialists, bankers, and brokers, that permit, facilitate, promote, and exploit loopholes in the tax code. We need our professional community to be pillars of commerce rather than pillars of circumvention. We need to close these loopholes.”

The Levin-Coleman report describes a range of sophisticated schemes being used today to enable U.S. citizens to shift assets offshore and dodge U.S. taxes.