THE 'Cut Unjustified Tax Loopholes Act' was introduced yesterday in the US senate. The bill aims to bring to justice tax evaders, crack down on offshore tax abuses, close tax loopholes that encourage corporations to move jobs offshore and end a corporate tax loophole that allows corporations to claim a stock option tax deduction that is greater than the stock option expense shown on their books.

The bill will also enable the Treasury Department the authority to take tough new actions to combat tax haven banks and tax haven jurisdictions that help U.S. clients hide assets and dodge U.S. taxes. The bill would prohibit corporations from taking a larger income tax deduction for stock-option grants than the expense shown on their books. It would also preserve the current tax treatment for individuals who receive stock options and for incentive stock options commonly used by start-up companies.

The bill would also combat hidden foreign financial accounts by allowing the IRS to use tax return information to evaluate foreign financial account reports, simplifying penalty calculations for unreported foreign accounts, and facilitating use of suspicious activity reports in civil tax enforcement. Penalties on tax shelter promoters and those who aid and abet tax evasion by increasing the maximum fine to 150 percent of any ill-gotten gains shall also be checked under this bill. It would prohibit fee arrangements in which a tax advisor is paid a fee based upon the amount of paper losses generated to shelter income or taxes not paid by a client.