Neal statement on foreign bank account reporting
(WASHINGTON, D.C.) Select Revenue Measures Subcommittee Chairman Richard E. Neal (D-MA) delivered the following statement today at a hearing on foreign bank account reporting.
“I call this hearing to order. Please take your seats.
“I want to welcome everyone to this hearing of the Select Revenue Measures Subcommittee on tax avoidance and foreign bank account reporting.
“When we last met on this issue in March of this year, we were seeking legislative options to handle the weaknesses exposed by the UBS case. The IRS and Justice Department were struggling to get the names of US accountholders from a bank that had already admitted complicity in a tax avoidance scheme for which they agreed to pay a $780 million fine. The treaty would only provide tax enforcement information if it was a crime under local law and if you had a name.
“Negotiations, however, produced a breakthrough and more than 4,500 names were to be divulged. The IRS announced an amnesty program which has thus far netted 7,500 taxpayers with previously hidden overseas accounts seeking to avoid the worst penalties. I congratulate IRS and DOJ on this hard-fought victory.
“Of course, the story does not end there. We never knew that tax information exchange would be virtually meaningless, because we didn’t have the names. We didn’t know bank secrecy would prove such an effective shield for evaders even when we knew a crime had been committed.
“Following our March hearing, President Obama announced a number of new enforcement provisions as part of his Budget proposal. Under the leadership of Chairman Rangel, we have spent months sorting through those issues and last week, Chairman Rangel and I filed the Foreign Account Tax Compliance Act of 2009.
“This bill creates a new reporting regime for foreign financial institutions with US accountholders, whether they are participants in the existing Qualified Intermediary program or not. This legislation casts a wide net in search of undisclosed accounts and hidden income. It is carefully balanced, and as we will hear from one foreign bank today, it is actually supported by one who will bear the brunt of this new disclosure.
“The American boxer Joe Louis once told an opponent who proceeded to outrun him for 12 rounds, ‘You can run, but you can’t hide.’ Louis knocked him out in the 13th round. I believe we are entering that 13th round and it will not be long before those individuals seeking to hide money overseas will be caught. This bill could be enacted by year end.”