Senate Committee Approves Levin Provision to Prohibit Federal Contracts to U.S. Companies that Move Offshore to Avoid Taxes

July 17, 2007 -- WASHINGTON – A provision authored by Sen. Carl Levin, D-Mich., to bar the award of all future federal government contracts to any U.S. company that has avoided paying federal taxes by setting up a phony headquarters offshore passed the Senate Appropriations Committee last week.

“Tax dodgers should be caught, not rewarded,” said Levin. “Most American companies play by the rules and pay their taxes. As a matter of simple fairness, they should not have to compete against tax scofflaws. I am pleased the Appropriations Committee has included this language in the bill to ensure we are not awarding federal contracts to corporate expatriates.”

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Levin’s provision addresses the issue of some U.S. companies that claim to have moved their headquarters offshore, when in reality, their primary offices and production or service facilities remain in the United States and their offshore presence is a shell corporation. Popular jurisdictions for shell corporations include the Cayman Islands and Bermuda.

The Levin provision, included in the Financial Services and General Government Appropriations Act for Fiscal Year 2008, marks the first time such a restriction would apply government-wide. Levin has successfully amended past appropriations bills to apply the ban to four federal departments: Homeland Security; Transportation; Treasury; Housing and Urban Development; and several federal agencies. The Levin provision would extend the ban to include all federal departments and agencies beginning in fiscal year 2008.

Source: Senator Carl Levin