Baucus Set To Introduce Offshore Bill

by Mike Godfey, Tax-News.com, Washington

05 May 2009

Senate Finance Committee Chairman Max Baucus is in the process of finalizing legislation which would increase the Internal Revenue Service's powers to scrutinize transactions involving offshore entities.

A Baucus aide told Reuters that the Senator would introduce a new bill into the Senate in the coming weeks.

According to Baucus, the legislation, which seeks to amend the US tax code to "improve tax compliance with respect to offshore transactions" will achieve three goals: to "detect, deter and discourage offshore tax evasion."

The Montana Democrat circulated a preliminary draft of the legislation in March to "obtain stakeholder input that will make the proposal stronger, more implementable, and more likely to become law."

The Baucus bill would require entities transferring funds offshore (other than on behalf of publicly traded companies) to report to the IRS the amount, destination and account information of funds transferred. It is separate to much stronger legislation introduced into the Senate by Carl Levin (the Stop Tax Haven Abuse Act), which would treat foreign corporations managed and controlled in the United States as domestic corporations for income tax purposes, create a ‘blacklist’ containing 34 jurisdictions, and dramatically strengthen penalties against tax shelter promoters.

Of the two bills, it is expected that the Baucus proposals, or some version of them, are the more likely to be enacted.

President Obama supported an earlier incarnation of Levin’s bill as a Senator in 2007. But as a senior Democrat and Chairman of the influential Finance Committee, which has jurisdiction over tax legislation, Baucus is closer to the administration and has more sway over tax policy.

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