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Tax Havens: International Tax Avoidance and Evasion


Individuals can evade taxes on passive income, such as interest, dividends, and capital gains, by not reporting income earned abroad. In addition, since interest paid to foreign recipients is not taxed, individuals can also evade taxes on U.S. source income by setting up shell corporations and trusts in foreign haven countries to channel funds. There is no general third party reporting of income as is the case for ordinary passive income earned domestically; the IRS relies on qualified intermediaries (QIs) who certify nationality without revealing the beneficial owners. Estimates of the cost of individual evasion have ranged from $40 billion to $70 billion. Most provisions to address profit shifting by multinational firms would involve changing the tax law: repealing or limiting deferral, limiting the ability of the foreign tax credit to offset income, addressing check-the-box, or even formula apportionment. President Obama's proposals include a proposal to disallow overall deductions and foreign tax credits for deferred income and restrictions on the use of hybrid entities. Provisions to address individual evasion include increased information reporting and provisions to increase enforcement, such as shifting the burden of proof to the taxpayer, increased penalties, and increased resources. Individual tax evasion is the main target of the HIRE Act, the proposed Stop Tax Haven Abuse Act, and the Senate Finance Committee proposals; some revisions are also included in President Obama's plan. Bills: H.R. 4213, S. 506, H.R. 1265, S. 386, S. 569, S. 3018


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Older Versions:

Tax Havens: International Tax Avoidance and Evasion  [Order No: R40623  Release Date: Jan 10,2013  Pages: 51]

Tax Havens: International Tax Avoidance and Evasion  [Order No: R40623  Release Date: Sep 03,2010  Pages: 47]

Tax Havens: International Tax Avoidance and Evasion  [Order No: R40623  Release Date: Jun 04,2010  Pages: 47]

Tax Havens: International Tax Avoidance and Evasion  [Order No: R40623  Release Date: Sep 18,2009  Pages: 40]

Tax Havens: International Tax Avoidance and Evasion  [Order No: R40623  Release Date: Aug 27,2009  Pages: 40]

Tax Havens: International Tax Avoidance and Evasion  [Order No: R40623  Release Date: Jun 09,2009  Pages: 40]

Tax Havens: International Tax Avoidance and Evasion  [Order No: R40623  Release Date: Jun 05,2009  Pages: 42]