International Financial Law Prof Blog

Editor: William Byrnes
Texas A&M University
School of Law

Tuesday, November 3, 2015

Will the USA Follow the EU Commission and Create Tax Haven Black Lists? Ways & Means Ponders This Question.

Stop Outsourcing and Create American Jobs Act of 2015: H.R.3812 — 114th Congress (2015-2016)

To amend the Internal Revenue Code of 1986 to provide for the identification of corporate tax Ways Means logohaven countries and increased penalties for tax evasion practices in haven countries that ship United States jobs overseas, and for other purposes.

In developing such list, the Secretary may consider the following criteria:

(1) Tax rate in the country.

(2) Lack of effective exchange of information between governments.

(3) Lack of transparency in financial services sector.

(4) Lack of requirements of substantial economic activity.

(5) Incentives which may encourage a United States corporation to invest abroad rather than domestically.

(6) Other factors deemed relevant by the Secretary.

SEC. 3. INCREASE IN PENALTIES FOR CORPORATE TAX EVASION PRACTICES CONCERNING RETURNS, DOCUMENTS, AND ACTIVITIES RELATING TO TAX HAVEN COUNTRIES.

(a) Accuracy-Related Penalty On Underpayments.—Section 6662 of the Internal Revenue Code of 1986 is amended by adding at the end the following:

“(l) Increase In Penalty In Case Of Tax Haven Countries.—

“(1) IN GENERAL.—In the case of any portion of an underpayment by a corporation for a taxable year which involves an undisclosed foreign financial asset located in a tax haven country at any time during such taxable year, subsection (a) shall be applied with respect to such portion by substituting ‘60 percent’ for ‘20 percent’.

“(2) TAX HAVEN COUNTRY.—For purposes of this subsection, the term ‘tax haven country’ means a country on the list published under section 2(a) of the Stop Outsourcing and Create American Jobs Act of 2015”..”.

(b) Understatements With Respect To Reportable Transactions.—Section 6662A of such Code is amended by adding at the end the following:

“(f) Increase In Penalty In Case Of Tax Haven Countries.—In the case of any portion of a reportable transaction understatement by a corporation for a taxable year which involves a transaction that originates, terminates, or otherwise occurs in a tax haven country (as defined in section 6662(l)(2)), subsection (a) shall be applied with respect to such portion by substituting ‘40 percent’ for ‘20 percent’.”.

(c) Fraud Penalty.—Section 6663 of such Code is amended by adding at the end the following:

“(d) Increase In Penalty In Case Of Tax Haven Countries.—In the case of any fraud by a corporation involving an activity occurring in a tax haven country (as defined in section 6662(l)(2)), subsection (a) shall be applied by substituting ‘100 percent’ for ‘75 percent’.”.

(d) Erroneous Claim For Credit Or Refund.—Section 6676 of such Code is amended by redesignating subsection (d) as subsection (e) and by inserting after subsection (c) the following new subsection:

“(d) Increase In Penalty In Case Of Tax Haven Countries.—In the case of claim or credit by a corporation for any excessive amount due for credits or refunds involving funds held or invested in a tax haven country (as defined in section 6662(l)(2)), subsection (a) shall be applied by substituting ‘40 percent’ for ‘20 percent’.”.

(e) Willful Attempt To Evade Or Defeat Tax.—Section 7201 of such Code is amended by adding at the end the following new sentence: “In the case of an attempt by a corporation which involves a tax haven country (as defined in section 6662(l)(2)), the preceding sentence shall be applied by substituting ‘$1,000,000’ for ‘$500,000’.”.

(f) Fraud And False Statements.—Section 7206 of such Code is amended by adding at the end the following new sentence: “In the case of an offense by a corporation described in the preceding sentence which involves a tax haven country (as defined in section 6662(l)(2)), the preceding sentence shall be applied by substituting ‘$1,000,000’ for ‘$500,000’.”.

(g) Fraudulent Returns, Statements, Or Other Documents.—Section 7207 of such Code is amended by adding at the end the following new sentence: “In the case of an offense by a corporation described in either of the two preceding sentences which involves a tax haven country (as defined in section 6662(l)(2)), the appropriate sentence shall be applied by substituting ‘$150,000’ for ‘$50,000’.”.

Download BILLS-114hr3812ih

http://lawprofessors.typepad.com/intfinlaw/2015/11/will-the-usa-follow-the-eu-commission-and-create-tax-haven-black-lists-ways-means-ponders-this-quest.html

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