U.S. taxpayers may be routinely underreporting their overseas financial activities despite disclosure requirements aimed at preventing tax evasion, according to a congressional report, says the Wall Street Journal.
The findings, compiled by the Senate Governmental Affairs Committee for a hearing Wednesday, support a global crackdown on secretive tax havens that is being led by major industrialized nations. The committee’s report attempts to show the problem posed by nations that don’t share information about Americans banking locally, because the Americans don’t report their dealings themselves, says the Journal.
People familiar with the report, which is based on Treasury Department data, told the Journal that U.S. taxpayers often aren’t complying with a federal law that requires them to file forms disclosing their significant overseas financial accounts — those valued at more than $10,000.
For example, last year, the government received only about 340 reports related to U.S.-controlled accounts in Panama, which is considered a tax-haven country. Analysts say Panama has about 372,000 so-called offshore corporations — entities designed to be owned or controlled by foreigners, says the newspaper. Many of those are believed to be owned or controlled by U.S. citizens.
For the Netherlands Antilles, the data show the U.S. received only about 300 reports for 2000, compared with about 21,000 offshore corporations registered there. The reporting requirements apply to both corporations and individuals, says the Journal.
Recently, the 30-nation Organization for Economic Cooperation and Development has tried to attack uncooperative tax havens by threatening sanctions for not making more information available about foreign nationals’ financial activities. Some Democrats on the governmental- affairs committee complain the Bush administration’s support for the OECD crackdown is waning, says the Journal.
Administration officials insist they still back the major element of the OECD initiative that encourages greater information-sharing among countries, while they have encouraged less of a focus on criticizing low tax rates in tax-haven countries, says the Journal. With the Bush administration’s encouragement, information sharing “is exactly what this OECD project is now focusing on,” Michele Davis, a spokeswoman for Treasury Secretary Paul O’Neill, told the Journal. O’Neill is scheduled to testify at Wednesday’s hearing.