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Upcoming Senate hearings will highlight that there certainly are some crooked tax shares out there. A senate report shows how four billionaires saved a bundle on phony tax shelters. As expected, they involved offshore banking centers, in this case not the Cayman Islands, but the UK's Isle of Man. According to Sen. Levin (Michigan), some of these tax shelters were uncovered during the fraud probe of Enron Corp. Upcoming Senate hearings will highlight that there certainly are some crooked tax shares out there. A senate report shows how four billionaires saved a bundle on phony tax shelters. As expected, they involved offshore banking centers, in this case not the Cayman Islands, but the UK's Isle of Man. According to Sen. Levin (Michigan), some of these tax shelters were uncovered during the fraud probe of Enron Corp.

The tax shelters involved two companies based in the Isle of Man, who bought and sold stocks with each other, and created the appearance of a $2 billion loss. This was then used in the billionaires' tax returns to set off against real income of $2 billion, made in real stock trades. This way, hundreds of millions of taxes to the US Treasury were avoided. In the middle of this scheme was the Seattle headquartered Hedge Fund, the Quellos Group, which set up these tax shelters, with the help of the KPMG accounting firm.

In another scam, involving the Isle of Man, a second billionaire set up a trust fund there. Later, there was evidence that the trust was not run independently for the public good, but was used to pay for jewelry, property and other gifts for family members. Senator Levin wants to take legislative action to make it harder to avoid taxes with overseas financial trusts. He wants to force foreign banks to disclose to the IRS when the beneficiary of a trust is an American.

The report on these abuses was issued by Sen. Levin and Sen. Norm Coleman, and it is bipartisan. Recommendations to address these problems include a "presumption of control". That means that if U.S. persons or entities are sending money to offshore entities in the Cayman Is., the Isle of Man, or other known tax havens, it is presumed that the U.S. entities control the offshore entity.

Publicly traded U.S corporations should be force to disclose ownership of stock or other assets off shore. Note: This would have come in mighty handy in busting the fraud of the Delphi Corporation bankruptcy and other US Corporations declaring US bankruptcy in order to "globalize" their assets. That means moving their production overseas where they can use slave-labor and avoid paying most taxes.

A lot of this data is already gathered under anti-money laundering laws. The same information can be used to force the US owner of overseas assets to file a 1099 form. A pending regulation of the US Treasury can be applied against foreign-based hedge funds that are affiliated with U.S. based Hedge Funds to report suspicious transactions to US authorities. Finally, there can be sanctions against un-cooperating offshore tax havens.