Tax cheats by super-rich could amount to $70 billion a year

A week after reporting that the IRS' staff of estate tax lawyers will be cut almost in half, tax reporter David Cay Johnston has written a piece on a Senate report that finds tax cheating by the wealthiest Americans at a new high.

So many superrich Americans evade taxes using offshore accounts that law enforcement cannot control the growing misconduct, according to a Senate report that provides the most detailed look ever at high-level tax schemes. (. . .)

Cheating now equals about 7 cents out of each dollar paid by honest taxpayers, as much as $70 billion a year, the report estimated.

“The universe of offshore tax cheating has become so large that no one, not even the United States government, could go after all of it,” said Senator Carl Levin, the Michigan Democrat whose staff ran the investigation.

Senator Norm Coleman, the Minnesota Republican who is chairman of the subcommittee, adopted the minority report on Sunday as the product of the full committee.

The report details how the Quellos Group, a tax shelter boutique based in Seattle, “concocted a tax shelter” using $9.6 billion “worth of fake securities transactions that were used to generate billions of dollars of fake capital losses.”

Many of the billionaires cited in the report claim that they are the victims of unscrupulous tax lawyers and accountants.