Sen. Paul Blocks Two Tax Treaties from Advancing to Senate Vote – Los Angeles Income Tax Planning & Income Tax Litigation Attorney Bruce Givner

by Bruce Givner on August 14, 2014

On June 4, Senator Rand Paul once again halted the advance of two outstanding US tax treaties out of opposition to the treaties’ effects on taxpayer privacy.

Sen. Paul has effectively prevented any further progress on the tax treaties with Switzerland and Chile for the time being by objecting to Senate Foreign Relations Committee Chairman Robert Menendez’s (D-NJ) attempt to bring the treaties to a full vote in the Senate. Despite the setback, Sen. Menendez has said he will continue to advocate for the treaties’ ratification.

Long known for his opposition to anything that smells of big government, Sen. Paul continued in his long-time opposition to the tax treaties. Along with three other treaties (those with Luxembourg, Hungary, and a multilateral accord with the Organization for Economic Cooperation and Development (OECD)), the tax treaties with Switzerland and Chile aim to increase intergovernmental communication on tax matters while also seeking to reduce the burden of double taxation. The other three treaties currently await action in the full Senate after their approval by the Foreign Relations Committee in April.

The Hungary and Chile treaties contain further provisions designed to address what is referred to as “treaty shopping,” or the practice by which multinational corporations structure themselves to take advantage of a particularly favorable tax regime. Despite these worthy goals, Sen. Paul insists that the treaties contain vague standards of taxpayer privacy which would allow the government to access and share taxpayers’ financial information that “may be relevant” to a tax investigation. Although he self-admittedly supports treaties aimed at preventing fraud, Sen. Paul wants these particular treaties to employ a previous standard “that said that you had to be committing tax fraud or that you had to be engaged in fraudulent activities” for the government to be allowed access to private financial information.

In spite of this opposition, Sen. Menendez and his colleague, Sen. Ben Cardin (D-Md), have said they will continue to find opportunities to bring up the accords. Although Sen. Cardin has not given a date when Menendez might try again, the senator is confident of the treaties’ ultimate success due to their bipartisan support and the blessings of the business community.

Givner & Kaye focuses on sophisticated income tax planning and compliance, tax litigation and procedure, estate planning, and asset protection plans for individuals and businesses in Beverly Hills, Calabasas, West Los Angeles, Hollywood, and other areas of Los Angeles, Orange, Ventura, San Bernardino, Riverside and Santa Barbara Counties. Call Los Angeles Estate Planning and Asset Protection Plan Attorneys Givner & Kaye at (310) 207-8008 today.


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