U.S. taxpayers and U.S. companies shifting profits and come to other countries robs the Government of more than $100 billion in tax revenue each year according to a report by a congressional research group the Congressional Research Service.
The federal government loses both individual and corporate income tax revenue from the shifting of profits and income into low-tax countries, the report says. The revenue losses from this tax avoidance and evasion are difficult to estimate, but some have suggested that the annual cost of offshore tax abuses may be around $100 billion per year.
A large portion of the tax evasion relating to individuals occurs when they take actions to move their investments to foreign companies and then do not report the holdings of these assets on their tax returns.When a person does this, they evade a tax that they are legally required to pay. according to CRS.
a multinational firm that constructs a factory in a low-tax jurisdiction rather than in the United States to take advantage of low foreign corporate tax rates is engaged in avoidance, whereas a U.S. citizen who sets up a secret bank account in the Caribbean and does not report the interest income is engaged in evasion.
Presently, Uncle Sam is cracking down in individual tax avoidance by increasing tax-reporting burdens.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.
In addition, there are new requirements for reporting of U.S. taxpayer funds in their accounts. This will be a major focus of the Internal Revenue Service this year.
Jeffrey Newman represents whistleblowers