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Two Senate Bills Would Target Tax Havens and Protect Whistleblowers

S.J. Steinhardt
Published Date:
Mar 3, 2023

Two pieces of legislation were introduced in the U.S. Senate, one to require public companies to disclose their financial reporting on a country-by-country basis, and another to strengthen the IRS's whistleblower program, Accounting Today reported.

The first, the Disclosure of Tax Havens and Offshoring Act, would “provide transparency around corporations’ use of tax havens and incentives to offshore jobs,” according to a statement by Sen. Chris Van Hollen (D-Md.), the bill’s sponsor.

The legislation directs the Securities and Exchange Commission (SEC) to require public disclosure of country-by-country financial reports, including basic information from a corporation on each of their subsidiaries, by large corporations.

Despite corporations with annual revenues above $850 million reporting all of this information to the IRS under an international framework from the Organization for Economic Cooperation and Development, the reports are not public, Accounting Today reported. The Financial Accounting Standards Board (FASB) is updating its rules to require more detailed international tax disclosures.

“For too long, big corporations have taken advantage of the U.S. tax code to hide their profits and ship their jobs overseas—and the Republicans’ 2017 tax scam gave corporations new incentives to offshore jobs,” Hollen said in a statement. “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.” 

The other bill, The IRS Whistleblower Program Improvement Act of 2023, has bipartisan support. It includes six measures “to bolster the successful program, ensure fairness and protect the whistleblowers who come forward,” according to a statement from Sen. Chuck Grassley (R-Iowa), one of the bill’s sponsors. Those measures are:

● Providing for "de novo" review in appeals heard by the U.S. Tax Court, allowing for new evidence to be admitted to the record;
● Establishing a presumption of anonymity for whistleblowers before the court;
● Exempting whistleblower awards from budget sequestration;
● Providing that interest be paid to awardees if the whistleblower award has not been paid within one year of the IRS collecting all proceeds;
● Bringing the tax treatment of attorney's fees into line with other whistleblower programs; and
● Improving 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," said Grassley. "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."

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