Society

Obama Administration Announces New Tax Evasion Rules

| by Robert Fowler
President Barack ObamaPresident Barack Obama

The Obama administration has installed new financial regulations in an attempt to root out costly tax evasion and money laundering schemes. The maneuver was prompted by revelations from the Panama Papers.

On May 5, the U.S. Department of the Treasury finalized a new rule dubbed “customer due diligence,” which will mandate that banks be more transparent about their owners and the companies they work with, according to CBS News.

Another rule that would close a loophole that exempts foreign-owned companies operating in the U.S. from disclosing their finances to the IRS is also in the works.

Treasury Secretary Jacob Lew sent a letter to Congress, requesting it pass legislation that would add more regulation to the banking industry and empower law enforcement to investigate secret owners and tax schemes.

Popular Video

A police officer saw a young black couple drive by and pulled them over. What he did next left them stunned:

Popular Video

A police officer saw a young black couple drive by and pulled them over. What he did next left them stunned:

“Illicit financial activity is a critical concern for the United States and our partners around the world,” Lew wrote. “Additional statutory authority is necessary to put the United States in the strongest position to combat bad actors who seek to hide their financial dealings and evade their tax responsibilities.”

Lew also requested that Congress ratify eight tax treaties that are currently in limbo, stressing that they will help “ensure fair and full enforcement of our tax laws.”

The Department of Treasury’s aggressive new push to bring transparency to U.S. banking arrives hot on the heels of the Panama Papers leak, which revealed that trillions of dollars of revenue were being hidden in offshore accounts and business merger schemes internationally.

The data trove also revealed that the U.S. had become a tax haven for foreign companies, much the same way U.S. businesses seek to hide their income in the the Cayman Islands and Switzerland.

On April 5, President Barack Obama called for action to combat the activity evidenced in the Panama Papers.

“A lot of these loopholes come at the expense of middle-class families,” the president said, reported NBC News.  “There’s always going to be illicit movements of funds but we shouldn’t make it legal.”

On May 6, during a press conference discussing the current state of U.S. job growth, Obama echoed Lew’s call for Congress to pass legislation to discourage offshore tax evasion schemes.

“We are requiring the banks and other financial institutions to know, very and report who the real people are behind shell corporations that set up accounts at those institutions,” Obama said, reported USA Today “Only Congress can fully close those loopholes that wealthy individuals and powerful corps take advantage of, often at the expense of the middle class.”

Sources: CBS News, NBC News, USA Today / Photo credit: U.S. Department of Commerce/Flickr

Should Congress pass legislation to crack down on tax avoidance?
Yes - 100%
Yes - 0%