The Business, Entrepreneurship & Tax Law Review
Article Title
On the Effort to Discover and Eliminate Offshore Tax Abuse
Abstract
The practice of tax evasion includes dumping money into secretive offshore accounts to shield financial assets from discovery. U.S. taxpayers have used jurisdictions with low tax rates and secretive banking practices to store unreported financial assets. If the taxpayer chose not to report foreign assets, the existence of these accounts often remained undetected by the U.S. The uncollected taxes from these accounts was a justification for congressional action. The ability of the wealthy to take advantage of tax evasion and avoidance could be contributing to wealth inequality. The congressional response to offshore tax evasion includes the Bank Secrecy Act of 1970 and the Foreign Account Tax Compliance Act (“FATCA”) of 2010. These laws provide for penalties to a U.S. Taxpayer who does not report his foreign transactions, tools for discovering unreported assets. The 2010 law has had an impact on discovering these hidden accounts and immediately preceded the large media publication of the “Panama Papers,” which exposed the inner workings of how these offshore tax shelter can work. Finally, this article discusses possible measures that could further the current government effort to collect revenue from U.S. taxpayer’s offshore assets.