Report: Foreign Banks Aided Tax Evasion

Report: Foreign Banks Aided Tax Evasion
By Richard Rubin, CQ Staff


Several influential senators hope a new report on efforts by U.S. citizens to evade taxes with the help of foreign banks will propel lawmakers to crack down on the practice.

The report, based partly on information leaked by former bank employees, shows how banks created shell corporations and foundations to help wealthy citizens hide money overseas.

The IRS and the Justice Department have been investigating the matter, and senators say the government could be losing up to $100 billion annually in revenue because of these and similar tax avoidance practices.

The report will be released during a hearing Thursday of the Permanent Investigations Subcommittee of the Committee on Homeland Security and Governmental Affairs. The report focuses on the activities of UBS AG and LGT, a bank owned by the royal family of Liechtenstein.

“Bank secrecy has not just protected the banks’ clients, but these deceptive practices also protect the banks themselves, who have been helping their clients to evade taxes, to dodge creditors and to defy court orders,” said panel Chairman Carl Levin , D-Mich., who has sponsored a bill (S 681) on tax avoidance and said he expects dramatic testimony at the hearing. “We are determined to tear down these walls of secrecy and to break through the iron rings of deception.”

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A bill will be introduced to catch some of these crooks and liars.

"The measure, which has four cosponsors, including presidential candidate Sen. Barack Obama , D-Ill., has been referred to the Finance Committee. A companion House measure (HR 2136) by Rep. Lloyd Doggett , D-Texas, has 46 cosponsors."