Tax Evasions through Inversions

Last updated on September 24, 2023

Tax evasion cannot be completely halted, but it can be limited. The Obama administration has been taking bold steps to control tax evasion, both legal and illegal. Although the latter is being controlled through the implementation of the foreign account tax compliance act (FATCA), restricting tax evasion conducted through legal means is more difficult.

The Obama administration is looking to prevent legal tax evasion by potentially overhauling the tax code. Because the Treasury is losing a significant amount in revenue due to tax inversions, there has been a growing concern over closing loopholes in the tax code. Tax inversions drastically reduce the liability of U.S. companies, making them more profitable. Although this trend has not gotten completely out of control, it might increasingly seem lucrative to other companies if left unchallenged.

This threat of tax inversions is now being reviewed by the Obama administration with respect to making changes in the tax laws. The changes are expected to make tax inversion less attractive to companies. A tax code overhaul would also help in preventing legal tax evasion.