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CORPORATE TAX SCOFFLAWS TARGETED

WASHINGTON, DC - The Bush Administration and Congress are reportedly vowing to crack down on corporate tax fraud and avoidance by seeking regulatory and legislative changes and stepping up enforcement and prosecution efforts.

The Justice Department has intensified actions to identify, investigate and punish tax dodgers, including corporations, according to a recent news release from the Internal Revenue Service, the US taxing authority.

Tax evasion by wealthy individuals and large companies has become a recurring election-year political issue. According to the Treasury Department, in 2003 corporate tax receipts as a share of the overall economy, or gross domestic product (GDP), fell to the lowest level since 1937, with the exception of 1983.

The General Accounting Office (GAO), Congress' investigative arm published a report based on a study that found that more than 60% of US firms and about 70% of foreign-owned companies operating in the United States did not pay any US federal taxes between 1996 and 2000.

The report also said that those foreign firms that pay some US taxes report a much smaller average tax liability on their US - in relation to their gross receipts - than do US firms.

The report blamed corporate tax avoidance on "gaping loopholes" in the US tax code, its administration and enforcement, and he said the loopholes enable foreign-based companies to move overseas billions of dollars in profits earned in the US.

In March, Treasury Secretary John Snow said that his department is clamping down on abusive tax shelters - including those involving foreign government-owned infrastructure - used by corporations and individuals to escape their tax obligations.

He said the IRS has increased audits of tax-shelter promoters and their clients and, along with other Treasury offices, has taken steps to shut down certain tax shelters through increased disclosure requirements.

Snow said Treasury also has recommended draft legislation that would impose "meaningful" penalties on the users of these schemes who fail to disclose relevant transactions and the promoters who fail to register such transactions or maintain lists of tax-shelter users.

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