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Senators Introduce New Legislation

By B. Wayne Creel

 

On February 17, 2007, United States Senators Carl Levin (Democrat, Michigan), Norm Coleman (Republican, Minnesota), and Barack Obama (Democrat, Illinois) introduced the Stop Tax Haven Abuse Act, S. 681.  The stated impetus for the introduction of this bill is to prevent the use of offshore trusts and other asset protection devices from reducing tax revenue of the U.S.

Senators Levin and Coleman for the past four years have led an investigation into offshore tax havens, abusive tax shelters, and professionals who create and service this type of structures. They Senators cite to experts who have estimated that the total loss to the U.S. Treasury from offshore tax evasion approaches $100 billion per year, including $40 to $70 billion from individuals and another $30 billion from corporations engaging in offshore tax evasion

In order to prevent such claimed abuses, the 68 page bill provides that evidentiary presumptions would be established, such as, that non-publicly traded, offshore corporations and trusts are presumed controlled by the U.S. taxpayers who formed them or sent assets to them.

It also provides that Treasury authorities would be given authority to take special measures against foreign jurisdictions and financial institutions which impede U.S. officers. Additionally, the proposed bill would allow for the taxing of offshore trust income.

The bill also provides an initial list of ?34 Offshore Secrecy Jurisdictions.? The jurisdictions in the initial list are: Anguilla, Anitgua and Barbuda, Aruba, Bahamas, Barbados, Belize, Bermuda, British Virgin Islands, Cayman Islands, Cook Islands, Costa Rica, Cyprus, Dominica, Gibraltar, Grenada, Guernsey/Sark/Alderney, Hong Kong, Isle of Man, Jersey, Latvia Lichtenstein, Luxembourg, Malta, Naura, Netherlands, Antilles, Panama, Samoa, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Singapore, Switzerland, Turks and Caicos, and Vanuatu.

While it is unclear whether a private right of action would exist under any of the currently proposed provisions, the bill is important as it indicates the Senate's growing interest in preventing offshore activity which it perceives as harming the U.S. government and its citizens.  Additionally, if the bill is eventually passed, the provisions may become useful tools for civil litigants to enforce their rights and collect against offshore trusts and entities.

Full post as published by International Asset Recovery Law Blog on March 28, 2007 (boomark / email).