Stop Tax Haven Abuse Act of 2011 Introduced

Editor's Note: The following was derived from the U.S. Senate web site page of Carl Levin (D - MI)


On July 12th, Sen. Carl Levin, D-Mich., together with cosponsors Senators Conrad, Bill Nelson, Sanders, Shaheen, and Whitehouse, introduced legislation to close offshore tax loopholes and strengthen offshore tax enforcement.

Targeting $100 billion in lost revenue each year from offshore tax dodges, the bill would:

  • AUTHORIZE SPECIAL MEASURES TO STOP OFFSHORE TAX ABUSE (§101) by allowing Treasury to take specified steps against foreign jurisdictions or financial institutions that impede U.S. tax enforcement.
  • STRENGTHEN FATCA (§102) by clarifying under the Foreign Account Tax Compliance Act when foreign financial institutions and U.S. persons must report foreign financial accounts to the IRS.
  • ESTABLISH REBUTTABLE PRESUMPTIONS TO COMBAT OFFSHORE SECRECY (§102) in U.S. tax and securities law enforcement proceedings by treating non-publicly traded offshore entities as controlled by the U.S. taxpayer who formed them, sent them assets, received assets from them, or benefited from them when those entities have accounts or assets in non-FATCA institutions, unless the taxpayer proves otherwise.
  • STOP COMPANIES RUN FROM THE UNITED STATES CLAIMING FOREIGN STATUS (§103) by treating foreign corporations that are publicly traded or have gross assets of $50 million or more and whose management and control occur primarily in the United States as U.S. domestic corporations for income tax purposes.
  • STRENGTHEN DETECTION OF OFFSHORE ACTIVITIES (§104) by requiring U.S. financial institutions that open accounts for foreign entities controlled by U.S. clients or open foreign accounts in non-FATCA institutions for U.S. clients to report the accounts to the IRS.
  • CLOSE CREDIT DEFAULT SWAP (CDS) LOOPHOLE (§105) by treating CDS payments sent offshore from the United States as taxable U.S. source income.
  • CLOSE FOREIGN SUBSIDIARY DEPOSITS LOOPHOLE (§106) by treating deposits made by a controlled foreign corporation (CFC) to a financial account located in the United States, including a correspondent account of a foreign bank, as a taxable constructive distribution by the CFC to its U.S. parent.
  • REQUIRE ANNUAL COUNTRY-BY-COUNTRY REPORTING (§201) by SEC-registered corporations on employees, sales, financing, tax obligations, and tax payments.
  • ESTABLISH A PENALTY FOR CORPORATE INSIDERS WHO HIDE OFFSHORE HOLDINGS (§202) by authorizing a fine of up to $1 million per violation of securities laws.
  • REQUIRE ANTI-MONEY LAUNDERING PROGRAMS (§§203-204) for hedge funds, private equity funds, and formation agents to ensure they screen clients and offshore funds.
  • STRENGTHEN JOHN DOE SUMMONS (§205) by allowing the IRS to issue summons to a class of persons that relate to a long-term project approved and overseen by a court.
  • COMBAT HIDDEN FOREIGN FINANCIAL ACCOUNTS (§206) by allowing IRS use of tax return information to evaluate foreign financial account reports, simplifying penalty calculations for unreported foreign accounts, and facilitating use of suspicious activity reports in civil tax enforcement.
  • STRENGTHEN PENALTIES (§§301-302) on tax shelter promoters and those who aid and abet tax evasion by increasing the maximum fine to 150% of any ill-gotten gains.
  • PROHIBIT FEE ARRANGEMENTS (§303) in which a tax advisor is paid a fee based upon the amount of paper losses generated to shelter income or taxes not paid by a client.
  • REQUIRE BANK EXAMINATION TECHNIQUES (§304) to detect and prevent abusive tax shelter activities or the aiding and abetting of tax evasion by financial institutions.
  • ALLOW SHARING OF TAX INFORMATION (§305) upon request by a federal financial regulator engaged in a law enforcement effort.
  • REQUIRE DISCLOSURE OF INFORMATION TO CONGRESS (§306) related to an IRS determination of whether to exempt an organization from taxation.
  • DIRECT THE ESTABLISHMENT OF STANDARDS FOR TAX OPINIONS (§307) rendering advice on transactions with a potential for tax avoidance or evasion.

For more information about the Stop Tax Haven Abuse Act of 2011, visit Sen. Carl Levin's web page at


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