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Tiberi Opening Statement: Hearing on Banking Secrecy Practices and Wealthy American Taxpayers

March 31, 2009


Thank you, Chairman Neal.  I share many of the concerns you outlinedin your statement and look forward to working together on responsible,common-sense steps that will make our efforts to crack-down onindividuals who commit tax fraud more effective.  Thank you also to ourwitnesses.  I appreciate your willingness to join us today and lookforward to your testimony. 

Tax evasion – through the use of undeclared offshore bank accountsor by any other means – is a Federal crime.  I think we are all inagreement that criminal tax evasion should be pursued aggressively andpunished.  Not going after the dishonest few who commit criminal actsto the fullest extent possible is unfair to honest, hardworkingAmericans who pay their taxes and strive to comply with our country’stax laws. 

The on-going events surrounding UBS AG and its admitted criminalrole in helping a number of wealthy U.S. individuals evade U.S. taxeshave brought a spotlight to bear on international tax enforcement andthe tools we have at our disposal to help ensure compliance.

Among those tools is the Qualified Intermediary program.  Under theQI program, foreign financial institutions agree to verify the statusof foreign investors and collect and remit the appropriate U.S.withholding tax, if any.  Recent events have demonstrated a number ofareas where the QI program may be strengthened, and I hope we willdiscuss some of those today.  Additionally, the U.S. has entered intodozens 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 ensurecompliance with our tax laws.  A number of frameworks currently existacross government and the private sector.  As we proceed with thisdiscussion we should keep in mind that there are willing partners onthe international front, and continuing to improve and work through ourformal network of information exchanges is the responsible way to moveforward.  Steps that undermine our international standing couldthreaten key information exchanges and invite unintended consequencesthat could do significant harm to our economy’s capital markets.

This hearing is an important opportunity to examine the serious taxcompliance issues we face, find out where our current enforcementregime may have fallen short, and explore new tools that may help usfight tax evasion and close the international tax gap.   

As we all know, the “tax gap” is defined roughly as what is legallyowed, but not collected.  I sincerely hope our efforts today willremain focused on issues of compliance.  The line between illegal taxevasion and legal tax practices used by U.S. taxpayers around the worldis distinct.  To blur that line may only make our compliance effortsmore difficult. 

Thank you again, Chairman Neal, for your leadership on this issue.