New bills would expose offshore tax havens, boost whistleblower protections

Lawmakers introduced two pieces of legislation Thursday in the Senate to require public companies to disclose their financial reporting on a country-by-country basis and strengthen the Internal Revenue Service's whistleblower program.

Sen. Chris Van Hollen, D-Maryland, led 10 Senate Democrats and independents in introducing the Disclosure of Tax Havens and Offshoring Act, which aims to provide transparency around corporations' use of tax havens and incentives to offshore jobs. The bill would direct the Securities and Exchange Commission to mandate public disclosure of country-by-country financial reports by large corporations. The reports would include basic information from a corporation on each of their subsidiaries, and country-by-country financial information that sums together all of their subsidiaries in each country — including profits, taxes, employees and tangible assets. 

"This bill will provide vital transparency to both the American public and investors as to how these corporations abuse our broken tax system and the risks they are taking in the use of offshore tax havens," said Van Hollen in a statement.

Corporations with annual revenues above $850 million already report all of this information to the IRS under an international framework from the Organization for Economic Cooperation and Development, but the reports aren't public. The European Union and Australia are moving to require more public reporting of corporate international tax and financial information, while in the U.S., the Financial Accounting Standards Board is working on updating its accounting rules to require more detailed international tax disclosures.

Stefani Reynolds/Bloomberg

The legislation is co-sponsored by Sen. Dick Durbin, D-Illinois; Bernie Sanders, I-Vermont; Tina Smith, D-Minnesota; Sheldon Whitehouse, D-Rhode Island; Amy Klobuchar, D-Minnesota; Robert Casey, D-Pennsylvania, Richard Blumenthal, D-Connecticut; Tammy Baldwin, D-Wisconsin; Tammy Duckworth, D-Illinois; and Elizabeth Warren, D-Massachusetts. It is supported by several advocacy groups, including the FACT Coalition, Public Citizen, the Institute for Taxation and Economic Policy, and the American Federation of State, County and Municipal Employees.

Tax whistleblower protection bill

The tax whistleblower bill has bipartisan support and was introduced Thursday by Sen. Chuck Grassley, R-Iowa; Ron Wyden, D-Oregon; Roger Wicker, R-Alabama; and Ben Cardin, D-Maryland.

The IRS Whistleblower Program Improvement Act includes six measures to bolster the program, ensure fairness, and protect the whistleblowers who come forward. The legislation would provide for "de novo" review in appeals heard by the U.S. Tax Court, allowing for new evidence to be admitted to the record; establish a presumption of anonymity for whistleblowers before the court; exempt whistleblower awards from budget sequestration; provide that interest be paid to awardees if the whistleblower award has not been paid within one year of the IRS collecting all proceeds; bring the tax treatment of attorney's fees into line with other whistleblower programs; and improve the program's annual report to Congress to help tax writers identify areas in most need of attention.

"The IRS Whistleblower Awards Program has a proven track record of success in preventing tax dodgers and fraudsters from cheating the American tax system. Whistleblowers are essential to this process," Grassley said in a statement. "Our bill will provide improved protection and support for whistleblowers so that this program can continue to encourage cooperation in improving compliance and fairness in our tax system."

The whistleblower program has allowed the IRS to collect more than $6 billion from wealthy individuals and businesses caught evading taxes and retrieved additional billions of dollars through the Offshore Voluntary Disclosure Program, which was created as a result of actionable information brought to the IRS by whistleblowers. The IRS Whistleblower Program Improvement Act is supported by the National Whistleblower Center and Taxpayers Against Fraud.