Tax & Budget Policy News

Statement of Nicole Tichon, Federal Tax and Budget Reform Analyst for the US Public Interest Research Group on important new tax codification – the Economic Substance Doctrine – in the new America's Affordable Health Choices Act of 2009

“Many corporations in our country use offshore shell companies, sham headquarters, and fictitious transactions to avoid paying billions of dollars in federal taxes. The result is that taxpayers must ultimately pick up the tab.

“Current practices put ordinary tax payers and businesses without sham transactions at a disadvantage. Tax authorities must also currently play cat-and-mouse games to update regulations while companies invent new tax-avoidance schemes.

“By including language to finally make it law that a transaction needs to have a clear and meaningful business purpose, aside from beneficial tax treatment, Congress has taken a critical step in restoring some fairness to the tax system.

“The American taxpayers deserve a marketplace where productivity and innovation are rewarded instead of highly paid tax lawyers who have take advantage of the system. Making the Economic Substance Doctrine a part of the IRS Code gives regulators a chance to get out ahead of the next set of tax tricks and gimmicks that are sure to come down the pike.”

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U.S. PIRG, federation of state Public Interest Research Groups, is a non-profit, non-partisan public interest advocacy organization. For more information, click here or visit http://www.uspirg.org. For more information on U.S. PIRG’s campaign to Close Corporate Tax Loopholes click here.