WASHINGTON — An influential Democratic senator has demanded answers from the IRS about what it has done since the Panama Papers were published last spring to combat tax fraud committed through anonymous shell companies.
Oregon’s Ron Wyden, the top Democrat on the Senate Finance Committee, sent a letter Wednesday to Treasury Secretary Jacob Lew and IRS Commissioner John Koskinen, asking for data on required reporting about shell companies.
“It’s critical to determine whether our government has the right tools to discern legitimate businesses from criminal enterprises, and to identify what additional measures might be needed to fight financial crime,” Wyden said in his letter.
The April release of what’s now called the Panama Papers spotlighted how foreign leaders, drug cartels and the wealthy use offshore companies to skirt taxation and law enforcement. Under the umbrella of the International Consortium of Investigative Journalists, more than 300 journalists examined the leaked database of Panamanian law firm Mossack Fonseca, which showed the true owners of hundreds of secret offshore companies.
The reporting led the Panamanian firm to abandon its U.S. operations in Nevada and Wyoming, states that were being used by foreigners as offshore tax havens much like wealthy Americans flock to havens such as the Cayman Islands and Bahamas.
Wyden wants answers from the IRS about a special Corporate Fraud Task Force that was created in 2011 by the IRS and the Nevada secretary of state to probe Nevada business entities suspected of involvement in tax evasion, money laundering and other fraudulent and deceptive practices.
Wyden is after data that would show whether registered agents, such as Mossack Fonseca, kept records of real contacts for the companies they created. Russian and Brazilian business owners favored Wyoming and Nevada for the secrecy that protected their identities even though they did no actual business in the United States. McClatchy’s reporting showed how, in many cases, it was virtually impossible to know those true owners, and follow-up reporting showed Nevada may not know.
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