Search Form
Now choose a category »

Public Statements

Letter to Chairmen Camp and Baucus and Ranking Members Levin and Hatch

Letter

By:
Date:
Location: Washington, DC

Members of Congress are calling on Congress's tax-writing committees to close loopholes that may allow for the abuse of tax-preferred retirement accounts for tax evasion purposes.

Rep. George Miller (D-Calif.), ranking member of the House Education and the Workforce Committee, and Rep. Chris Van Hollen (D-M.D.), ranking member of the House Budget Committee, today called upon the leadership of the House Ways and Means Committee and the Senate Finance Committee to consider efforts to close loopholes that could allow wealthy individuals to use individual retirement accounts (IRAs) as tax shelters by misvaluing investments in IRAs to evade annual contribution limits.

This issue has come to light largely as a result of financial disclosure forms filed by Gov. Mitt Romney's presidential campaign showing that his IRA is worth as much as $87 million. How exactly the IRA came to grow so large and whether Gov. Romney took advantage of aggressive valuation techniques is one of many questions left unanswered due to Gov. Romney's decision not to release tax returns for any years other than 2010 and 2011. Miller, Van Hollen and other House members have expressed their concern that wealthy individuals, including Romney, might be abusing rules governing retirement accounts.

The lawmakers previously wrote to senior Treasury Department officials to inquire about the possible abuse of techniques such as asset misvaluation for tax evasion purposes. In response, Assistant Treasury Secretary Mark J. Mazur recently wrote that Treasury and the IRS "have been taking action to curb abuses" regarding valuation of assets in tax-preferred retirement plans" and that the IRS has established a working group to "study ways of improving compliance and enforcement in this area."

"Evasion of contribution limits on tax-preferred retirement plans is a significant problem that should be addressed as Congress looks to close the nearly $400 billion annual tax gap and, if the IRS comes to the conclusion that additional legislation is needed, we believe that Congress should act accordingly," Miller and Van Hollen wrote to the tax-writing committees. "This type of tax avoidance, at Bain and elsewhere, can increase the deficit and unfairly shift the tax burden onto already struggling middle-class families, and it undermines the fundamental principle of fair tax treatment for all citizens."

Read the letter:

September 27, 2012

The Honorable Dave Camp The Honorable Sandy Levin

Chairman Ranking Member

Committee on Ways and Means Committee on Ways and Means

U.S. House of Representatives U.S. House of Representatives

1102 Longworth House Office Building 1106 Longworth House Office Building

Washington, D.C. 20515 Washington, D.C. 20515

The Honorable Max Baucus The Honorable Orrin G. Hatch

Chairman Ranking Member

Committee on Finance Committee on Finance

U.S. Senate U.S. Senate

219 Dirksen Senate Office Building 219 Dirksen Senate Office Building

Washington, D.C. 20510 Washington, D.C. 20510


Dear Chairmen Camp and Baucus and Ranking Members Levin and Hatch:

We are writing to bring to your attention the fact that the Internal Revenue Service is currently studying ways to prevent abuse of tax-preferred individual retirement accounts (IRAs) for tax evasion purposes. We encourage you to consider this particular area of law as Congress considers tax reform legislation or other legislation that would address the fiscal cliff in a balanced way.

Recent media reports indicate that service partners and employees at Bain Capital may have contributed investment funds from company deals to tax-preferred retirement accounts such as IRAs and SEP-IRAs.[1] We are concerned by reports that some shares in these investments, and similar investments at other firms, may have been valued at an other than fair market value, thereby allowing these service partners to engage in tax avoidance by evading the annual contribution limits on IRAs and SEP-IRAs. The Washington Post recently reported that Bain Capital employees such as Mitt Romney may have invested in "low-valued" shares through their IRAs and SEP-IRAs. [2] However, Michael J. Graetz, former Deputy Assistant Treasury Secretary for Tax Policy in the Administration of George H.W. Bush, said, "The law deliberately set limits in order to restrict the revenue losses to the Treasury."[3]

In response to our inquiry on the subject, Assistant Treasury Secretary for Tax Policy Mark J. Mazur recently informed us that the Treasury Department and the IRS "have been taking action to curb abuses" regarding valuation of assets in tax-preferred retirement plans.[4] Assistant Secretary Mazur reports that the IRS has established a working group to "study ways of improving compliance and enforcement in this area."[5]

Evasion of contribution limits on tax-preferred retirement plans is a significant problem that should be addressed as Congress looks to close the nearly $400 billion annual tax gap and, if the IRS comes to the conclusion that additional legislation is needed, we believe that Congress should act accordingly. This type of tax avoidance, at Bain and elsewhere, can increase the deficit and unfairly shift the tax burden onto already struggling middle-class families, and it undermines the fundamental principle of fair tax treatment for all citizens.

Thank you in advance for your consideration of this request.

Sincerely,

GEORGE MILLER CHRIS VAN HOLLEN

Ranking Member Ranking Member

Committee on Education and the Workforce Committee on the Budget


Source:
Skip to top
Back to top