Dems want more action on tax deals

Five Senate Democrats urged the IRS to put harsher rules into place to stop the offshore tax deals known as inversions.

{mosads}The five Democrats said the recently finalized deal between Burger King and the Canadian doughnut chain Tim Hortons – perhaps the most prominent in the recent wave of cross-border mergers – could be a template for other companies seeking to slash their tax bill by moving abroad.

The two fast food chains, the Democrats charged, used holding companies to avoid taxes. The Democrats also want the Obama administration to put in tougher rules against earnings stripping, in which companies shift income between high- and low-tax jurisdictions.

“Clearly, the sole purpose of this special purpose, pass-through limited partnership structure is U.S. tax avoidance,” Sens. Carl Levin (Mich.), Tammy Baldwin (Wis.), Dick Durbin (Ill.), Mazie Hirono (Hawaii) and Jack Reed (R.I.) wrote.

President Obama reiterated his opposition to inversions in his year-end news conference on Friday, but to GOP lawmakers have said they don’t believe Washington can do much outside of overhauling the tax code to stop the practice.