Financial experts have expressed mounting concerns that the U.S. is becoming a tax haven for foreign investors. This is possible, they contend, due to a lack of transparency in certain states’ tax laws.
Professor Alan Appel, who leads New York Law School’s International Tax Program, has spoken and written on these issues, most recently in the latest issue of the Journal of Taxation and Regulation of Financial Institutions, where he focused on the role of institutions in addressing the growing problem.
In response to the Panama Papers’ revelations [Editor’s note: Find background here], the U.S. government has focused its attention on foreign investors who may be investing proceeds of illegal activity into U.S. entities without identifying the natural persons who are beneficial owners of the equity interests in such entities. The U.S. government wants the beneficial owners to be disclosed, and to that end is implementing new federal reporting requirements to identify those natural persons. The purpose of the disclosure is to thwart unlawful offshoring, to prevent illegal use of U.S. bank accounts [to launder money], and to uncover financial criminal activities, including tax avoidance or evasion practices.
Read his piece, “Expanded Reporting Obligations for Financial Institutions in the New World of Tax Transparency.”
Professor Appel presented on related topics at New York University’s 75th Institute on Federal Taxation in November 2016. He and his co-presenters at that event will author an upcoming academic paper, “Hiding the Ball: Anonymity, Tax Law, and the U.S. as the World’s Favorite New Tax Haven,” later this spring.