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Thursday, July 19, 2012
Mitt Romney Taxes For 2010 Not Fully Disclosed
Mitt Romney has not released his full tax records from 2010, including key documentation connected to his Swiss bank account.
Although President Barack Obama and an increasing number of Republican politicians have called on Romney to release tax returns from years prior to 2010, the public criticism has so far failed to note that Romney has not disclosed all of his tax documents for 2010 itself -- the only year for which the GOP presidential nominee has presented any final tax forms.
Romney released his 2010 tax return in January of this year, a document that first informed voters about the existence of his Swiss bank account and financial activities in Bermuda and the Cayman Islands. But people who own foreign bank accounts are required to file a separate document with the IRS that provides additional details on such overseas bank holdings, and Romney has not released that form to the public.
The Romney campaign did not respond to HuffPost's request to view the document.
Tax experts say it is almost certain that Romney did file the form, known as a Report on Foreign Bank and Financial Accounts, or "FBAR" in accountant slang. The penalty for not filing an FBAR can be severe, and the IRS would have expected to receive the form since Romney listed the Swiss bank account on his tax return. Listing the account on his tax return and then failing to file the subsequent FBAR would have been asking for a hefty fine, and would probably have heightened IRS scrutiny of prior tax filings.
Nevertheless, Romney's omission of the form from the earlier disclosure raises questions for tax policy experts about the function of his Swiss bank account, and whether or not Romney used other offshore bank accounts that did not generate interest.
"The campaign has never told us why he had a Swiss bank account," said Rebecca Wilkins, senior counsel for federal tax policy at Citizens for Tax Justice, a nonprofit tax reform group. "It just looks bad."For individuals seeking to game the U.S. tax code, Swiss bank accounts are only useful when used illegally. Swiss accounts are prized by global elites for their extreme levels of secrecy. That secrecy has allowed thousands of American taxpayers to stash income from offshore companies in a Swiss account, shielding it from the IRS.
Romney, however, disclosed his Swiss bank account to the IRS in 2010, meaning that at least for 2010, the account was of no use to avoid paying taxes.
But Swiss bank accounts have other benefits. By serving as a curtain between Romney's U.S. accounts and his foreign holdings, Romney's Swiss account could shield many financial activities from American scrutiny. Hypothetically, any politically unpopular investments, clever and complex asset sales designed to lower Romney's tax bills or other activities would be far more difficult to decipher.
Romney may not have engaged in any of those activities, but his as-yet-unreleased 2010 FBAR would make it easier to determine whether or not he did.
Although Romney's campaign declined to comment for this article, in January, Brad Malt, the manager of Ann Romney's blind trust, told reporters the Romneys had an account with Swiss bank UBS worth about $3 million, which generated roughly $1,700 in interest. Malt said the account was set up for "diversification" in 2003 -- a claim that puzzles tax and investment experts, who note that all of the investment options available in Switzerland are available in American accounts. Malt said the account was closed in 2010.
But Romney would only have had to report offshore bank accounts that generated interest on his tax returns. Other accounts that simply executed transactions and forwarded the money along to U.S. accounts would not have to be reported on the tax return. They would, however, have to be listed on the FBAR form Romney has not released to the public.
That Romney's disclosed account was with Swiss bank UBS has also raised eyebrows. In 2008, a whistleblower at the bank informed the IRS of thousands of accounts being operated by American clients to avoid paying U.S. taxes. For Americans, the coveted Swiss secrecy suddenly became a legal liability.
So much information was turned over to the IRS that it would have been extremely difficult for the agency to pursue cases against every offender. So the IRS established a special tax amnesty program, which allowed those who voluntarily turned themselves in to remain anonymous and pay limited penalties. Thousands of citizens have since come forward.
"It's unclear why he would have valued the Swiss bank account secrecy, and it wouldn't have enabled him legally to avoid U.S. tax," said Daniel Shaviro, a tax professor at New York University School of Law. "This is why there's speculation that he was into the amnesty program."
But Shaviro and other tax experts note that one of the principal benefits of the amnesty program is its anonymity. Nobody who received amnesty from the IRS would ever have to tell the public they'd held a Swiss bank account. Any politician who had received amnesty could have simply shut down their account and washed his or her hands of any political liability. And once the IRS was aware of the account, maintaining it would have had no tax benefits.
"The fact that they never said why he had it is just really bizarre to me," said Wilkins.