Sen. Applauds Efforts to Enforce U.S. Tax Compliance on Foreign Vessels

United States Senator Mary L. Landrieu, D-La., has commended the Internal Revenue Service's (IRS) efforts to ensure that all foreign vessels operating in the United States’ Outer Continental Shelf (OCS) comply with U.S. tax laws. In a letter to IRS Commissioner Doug Shulman, Sen. Landrieu welcomed the agency's directive to establish an Issue Management Team, which would investigate foreign corporations' ability to undercut rates of U.S. competitors by avoiding payment of U.S. taxes.

Following Hurricanes Katrina and Rita, American companies witnessed a sharp increase in the number of foreign vessels operating in the Gulf Coast's OCS. The Offshore Marine Service Association estimates that more than 70 foreign vessels are currently working on energy projects in the Gulf and many are offering "suspiciously low" rates that unfairly compete with Louisiana vessel owners and seafarers.

"This is an important step toward leveling the playing field for American companies and their employees working in the offshore energy sector," said Sen. Landrieu. "As the OCS Issue Management Team further examines this matter, I look forward to working with you and the Team to monitor tax compliance and enforcement issues that are triggered by foreign vessels operating in the OCS in the exploration and development of natural resources."

Sen. Landrieu asked Commissioner Shulman for regular updates on the Issue Management Team's progress in examining foreign companies operating in the OCS.

"Together, we can ensure that U.S. tax laws are respected and applied in a manner that guarantees fairness for all who derive income from energy exploration and production in the Gulf Coast region," Sen. Landrieu wrote.

The news was also welcomed by the Offshore Marine Service Association, which applauded the Senator’s leadership on the issue and the IRS's efforts to maintain an equitable system for American companies.

"This is extremely good news. It sends a message that everyone has to play by the same rules," said Ken Wells, President of the Offshore Marine Service Association based in Harahan, La. "This is about fairness. Louisiana vessel companies pay taxes. Louisiana seafarers pay taxes. Now the IRS is sending a strong message that foreign vessel companies and their crews can’t just reap the benefits of our offshore resources without paying their fair share. This is important for American seafarers because they have been under a double disadvantage. Foreign vessels that didn’t pay taxes were taking work away from American vessels and since it appears their crews weren't paying taxes either it undercut the American mariners’ ability to compete for those jobs.

"America is engaged in a critical debate about how we meet our future energy needs. This action by the IRS and Senator Landrieu's support for it are important because it applies to offshore oil and gas production and future development of renewable resources like wind and wave power."