New Tax Rules Proposed to Combat Tax Evasion
President Barack Obama announced last Friday a rule that would require companies to disclose more information about their owners as part of a crackdown on tax evaders and money launderers. The “Due Diligence Rule” has been in the works since 2012 and is meant to prevent criminals from using shell companies to evade taxes and hide assists in other countries. The President’s goal is to create more transparency in the U.S. banking system and the push is being linked to the disclosures in the “Panama Papers.” A second proposed rule would prevent a narrow class of foreign-owned companies from avoiding reporting to the IRS.
Although there is a two-year transition period for the rule to take effect, it is a striking reminder to individuals and corporations with assets abroad on the importance of properly reporting income.