WASHINGTON (Reuters) – The Obama administration on Tuesday endorsed legislation to crack down on offshore tax havens, raising the stakes in a showdown between the United States and bank-secrecy nations such as Switzerland.
The endorsement came from U.S. Treasury Secretary Timothy Geithner at a congressional hearing where he was asked about the wide-ranging tax haven bills unveiled on Monday in both the Senate and the House of Representatives.
"We fully support the legislation ... on offshore tax centers, and we look forward to working with you as part of the broader effort to address international tax evasion," Geithner told the House Ways and Means Committee.
The administration's support greatly improves the chances of offshore tax legislation becoming law this year, said Michigan Senator Carl Levin, chief sponsor of the Senate bill.
"It also sends a strong signal to tax havens that this administration is not going to tolerate the kind of offshore tax abuses that have been draining $100 billion a year from the U.S. Treasury," Levin said in a statement.
He asked Geithner to join other nations "calling for action to be taken at the G20 meeting in April to clamp down on offshore secrecy jurisdictions that impede tax enforcement." The global economic crisis is expected to dominate the meeting of the Group of 20 major developed and emerging economies.
The U.S. government last month widened its legal assault on tax dodgers with secret offshore accounts by suing Swiss banking giant UBS AG to try to obtain the names of thousands of its rich U.S. clients.
The civil lawsuit followed closely on UBS' agreement to pay $780 million and identify some clients in a deal to resolve criminal fraud charges that it helped Americans evade taxes.
UBS EXEC TO TESTIFY
Geithner's remarks came a day before a senior executive for UBS -- the world's largest banker to the rich -- was due to testify before a Senate subcommittee, chaired by Levin, that is looking into allegations of offshore tax evasion.
Mark Branson, chief financial officer of UBS Global Wealth Management and Swiss Bank, will appear on Wednesday before the Senate Permanent Subcommittee on Investigations.
Also testifying will be top officials of the U.S. Internal Revenue Service and the Justice Department's tax division.
A thriving business in tax evasion developed in recent years on Wall Street among consulting firms, law firms, hedge funds and other elite financial players. Some purveyors even sought patent protection for their off-the-shelf schemes.
The bills introduced by Levin and Texas Rep. Lloyd Doggett would ban patenting of tax avoidance plans; close offshore tax loopholes, including one that lets shell corporations escape U.S. taxes; target dozens of "secrecy jurisdictions" for greater scrutiny; and put a greater burden on U.S. taxpayers to show that their tax arrangements are legitimate.
When he was a senator last year, President Barack Obama co-sponsored similar legislation with Levin.
Separately, a senior IRS lawyer told Reuters that the tax-collecting agency may team up with other governments to crack down on tax cheats as it faces pressure to toughen rules on Americans who try to conceal income in offshore tax havens.
"We are concerned about U.S. people hiding their assets and not reporting their correct worldwide income," Steven Musher, IRS associate chief counsel for international issues, said in an interview on the sidelines of a banking conference.
At the same time, Musher said, the IRS does not want changes to be burdensome for banks and financial institutions.
"We are trying to achieve the balance between increasing the reliability and quality of documentation to serve these various competing purposes," he said.
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Topic: Obama administration backs Congress tax haven crackdown (Read 463 times)