Rep. Sander Levin, D-Mich., the ranking Democratic member of the tax-writing House Ways and Means Committee, plans to introduce legislation that would require Presidential candidates to make public 10 years of tax returns and disclose any overseas accounts.

Sander Levin

Levin’s bill, which he said Wednesday he is preparing, comes amid mounting pressure on presumptive Republican presidential nominee Mitt Romney to release more tax returns (see Romney Pressured to Release More Tax Returns). So far, Romney has insisted he will release only his 2010 and 2011 tax returns. But several prominent Republicans, including Alabama Governor Robert Bentley and Texas Governor Rick Perry, as well as the Obama administration and Democrats, have been urging Romney to follow the lead of his father, George, who released 12 years of tax returns in 1967 when he ran unsuccessfully for the presidency.

Levin said in a conference call with reporters on Tuesday that he worked with Romney's father, but he believes 10 years of returns is a "solid number."

"Governor Romney needs to immediately release his tax returns and also to explain them so that they are understandable to the American people," he said,

Levin echoed the mounting calls for transparency among members of both parties. His legislation would amend the Ethics in Government Act of 1978 to require presidential candidates to make public 10 years of tax returns and disclose any overseas accounts. Romney has insisted that his financial accounts are managed by a blind trust and that he does not have access to them.

When asked about the prospects for passage in a divided Congress that recently failed to advance the Disclose Act, which would require better disclosure of the sources of campaign contributions, Levin told Accounting Today, "I would hope there would be action because I think two things need to happen. Governor Romney needs to release his returns and explain them. Also, we need to amend the 1978 act so that in the future it’s not left up to the discretion of both candidates. I think the more this issue is discussed the more likely it is that there will be pressure to act and also to amend the 1978 act. A lot of these issues that I’ve discussed have some relationship to tax reform. So I hope that there will be Republican as well as Democratic support for acting on this bill. I know we’re kind of landlocked here, and it’s hard to get anything done. I’m hopeful that there will be serious consideration of the true need to amend the 1978 law."

Levin called on Romney to immediately release 10 years of tax returns. In addition to requiring candidates to release 10 years of tax returns, his legislation would require presidential candidate financial disclosures to include information not currently included on disclosures and not easily discernible from tax returns.  These disclosures would provide a fuller picture of a candidate’s financial holdings and interests. 

The legislation would require the candidate to also disclose: the location (country), value, and economic purpose of each offshore account, holding or investment of the candidate (other than investments in publicly traded corporations). It would also require presidential candidates to disclose the portion of the candidate’s capital gains income attributable to an investment of the candidate’s capital and the portion that is earned by managing other people’s money, such as carried interest income.

Levin’s legislation would also require candidates to release details of any ongoing compensatory arrangement between the candidate and any other individual or entity. The bill would also require more comprehensive disclosure of assets, including purchases and sales of assets, held by tax preferred accounts such as IRAs and 401(k) plans, along with details of the assets and activities of any entity in which the candidate has a controlling interest.

"In the case of Governor Romney, we have an unusually high amount of money in an IRA," Levin told reporters. "There are limits on what people can put into them. That's not to say IRAs are bad. We need to understand their use in order to address issues of taxation and tax reform."

Dean Zerbe, national managing director of the tax advisory firm alliantgroup and a former senior counsel and tax counsel for the Senate Finance Committee, noted that when Treasury nominees were being vetted by the Finance Committee, they usually only needed to produce three years of tax returns. “I think it looks fairly transparent as a political issue,” he said in an interview. “I deal with offshore accounts quite a bit, and there’s nothing I’ve seen from Romney that raised questions. I feel pretty familiar with the area. He’ll have to decide what to do on that, and the public will have to decide. It’s hard for me ever to be against transparency, but you have to wonder who we’ll ever get going forward in the bigger picture. There are lots of things the administration isn’t putting forward in terms of various issues as well. I really haven’t seen anything out there that seems to suggest a justification for going back any further, but I think I could spend several months of my life trying to understand his taxes.”