IRS Commissioner Douglas Shulman appeared before a Senate Homeland Security Subcommittee to explain the agency's rulings on mutual fund activity. Since 2006, the IRS has issued over 70 private letter rulings that allow mutual funds to make investments in commodities through foreign subsidiaries.
Currently, the IRS allows some mutual funds to use offshore shell corporations to bypass tax code limits on mutual fund trading in the commodities market. Chairman Sen. Carl Levin (D-MI) has expressed concern that this activity will lead to increased speculation and ultimately hurt the economy and American consumers.
Treasury Department’s Assistant Secretary for Tax Policy Emily McMahon was the other witness at this hearing of the Permanent Investigations Subcommittee of the Senate Homeland and Government Affairs Committee.