(REMARKS AS PREPARED)
Thank you, Chairman Neal. I share many of the concerns you outlined
in your statement and look forward to working together on responsible,
common-sense steps that will make our efforts to crack-down on
individuals who commit tax fraud more effective. Thank you also to our
witnesses. I appreciate your willingness to join us today and look
forward to your testimony.
Tax evasion – through the use of undeclared offshore bank accounts
or by any other means - is a Federal crime. I think we are all in
agreement that criminal tax evasion should be pursued aggressively and
punished. Not going after the dishonest few who commit criminal acts
to the fullest extent possible is unfair to honest, hardworking
Americans who pay their taxes and strive to comply with our country’s
tax laws.
The on-going events surrounding UBS AG and its admitted criminal
role in helping a number of wealthy U.S. individuals evade U.S. taxes
have brought a spotlight to bear on international tax enforcement and
the tools we have at our disposal to help ensure compliance.
Among those tools is the Qualified Intermediary program. Under the
QI program, foreign financial institutions agree to verify the status
of foreign investors and collect and remit the appropriate U.S.
withholding tax, if any. Recent events have demonstrated a number of
areas where the QI program may be strengthened, and I hope we will
discuss some of those today. Additionally, the U.S. has entered into
dozens of Tax Treaties and bilateral Mutual Legal
Assistance Treaties with other nations, as well as approximately twenty Tax Information Exchange Agreements.
In short, the United States is not alone in the effort to ensure
compliance with our tax laws. A number of frameworks currently exist
across government and the private sector. As we proceed with this
discussion we should keep in mind that there are willing partners on
the international front, and continuing to improve and work through our
formal network of information exchanges is the responsible way to move
forward. Steps that undermine our international standing could
threaten key information exchanges and invite unintended consequences
that could do significant harm to our economy’s capital markets.
This hearing is an important opportunity to examine the serious tax
compliance issues we face, find out where our current enforcement
regime may have fallen short, and explore new tools that may help us
fight tax evasion and close the international tax gap.
As we all know, the “tax gap” is defined roughly as what is legally
owed, but not collected. I sincerely hope our efforts today will
remain focused on issues of compliance. The line between illegal tax
evasion and legal tax practices used by U.S. taxpayers around the world
is distinct. To blur that line may only make our compliance efforts
more difficult.
Thank you again, Chairman Neal, for your leadership on this issue.
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