US lawmaker targets offshore tax evaders

By Kevin Drawbaugh

WASHINGTON (Reuters) - Wealthy Americans dodge more than $100 billion a year in taxes by hiding assets in the Cayman Islands and other offshore tax havens, said a senior lawmaker on Friday who is trying to put a stop to it.

Under legislation he is offering with Sen. Barack Obama, Sen. Carl Levin said it would become easier for federal authorities to pursue possible tax evaders by putting more onus on them to show that offshore shelters are legitimate.

"It's got to end, and it's going to take a change in the law," Levin said at the Reuters Regulation Summit.

The Michigan Democrat chairs the Senate Permanent Subcommittee on Investigations. He said subcommittee investigators, who have done a number of ground-breaking tax probes in recent years, are focused on the issue.

He acknowledged reports about a new probe into a Cayman Islands scheme.

"It's been described in the media that there's a tax avoidance scheme involving dividend tax shelters. I don't want to deny that," he said, declining to provide details.

"Apparently some of the folks that were subpoenaed by us decided to share that information with the media," he said.

Citigroup (C.N: Quote, Profile, Research, Stock Buzz), Lehman Brothers (LEH.N: Quote, Profile, Research, Stock Buzz), Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz) and UBS AG (UBSN.VX: Quote, Profile, Research, Stock Buzz) have received subpoenas relating to the probe, The Wall Street Journal reported last month.  Continued...