There have been lots of stories today I was thinking about throwing up on the blog (DCAA shenangians, Interior Department MMS shenangians), but I "http://online.wsj.com/article/SB122109613823821913.html">settled on an article you might have overlooked in the Wall Street Journal about the continuing investigations Sen. Carl Levin (D-MI) and the Senate Permanent Subcommittee on Investigations (PSI) have been conducting on offshore tax evasion. I've posted a few times (see href="/article/blogs/entry/5326/49" target="_blank">here and here too) over the last few weeks about corporate tax evasion. One blog in particular detailed another investigation of the PSI that found that foreign banks were recruiting wealthy American citizens to buy into their U.S. tax evasion schemes. Well, the latest from the PSI is a report about how U.S. banks (namely Morgan Stanley, Lehman Brothers Holdings Inc., Citigroup Inc. and Merrill Lynch ∓ Co.) are recruiting foreign hedge-fund investors to sell them abusive tax-avoidance transations (see the PSI press release). From the Wall Street Journal: The yearlong probe, which relied in part on internal bank documents and emails, concludes that Wall Street firms actively competed with one another in dreaming up complex transactions that allowed hedge funds to avoid withholding taxes imposed on dividends paid by U.S. companies. Is it me, or does this feel like a "if you scratch my tax evasion plan, I'll scratch yours?" First foreign banks are helping Americans avoid U.S. taxes. Now it turns out American banks are helping foreign individuals avoid U.S. taxes. No wonder we've got hundreds of billions of dollars in taxes that go uncollected every year - Uncle Sam is getting screwed from both sides of the ocean. The PSI report also took the time to rightly criticize both the Internal Revenue Service (IRS) and the Treasury Department: The Department of Treasury and the IRS have failed to take effective action to stop dividend tax abuse. They have failed to publish for ten years final regulations to address abusive stock loans, failed to clarify existing regulations related to abusive equity swaps, and failed to take enforcement actions against participating financial institutions or their clients. The silence and inaction of the Treasury Department and the IRS in the face of a growing problem have encouraged the spread of offshore dividend tax abuse. OMB Watch has certainly been very critical of IRS enforcement practices and it looks like we haven't even scratched the surface. Everyone is helping everyone else cheat to get a discount on their taxes and our tax enforcement agency has done nothing. Why am I still paying full price?