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Last year Citizens for Tax Justice (CTJ) published a report showing that the drug manufacturer Pfizer was holding (on paper) $74 billion of its profits offshore, declaring that these profits would be “permanently reinvested” abroad to avoid incurring even a dime of U.S. tax on those profits. Now a new report from Americans for Tax Fairness (ATF), based in part on CTJ research, finds that Pfizer has likely understated the size of its untaxed offshore stash by a factor of two. In fact, Pfizer may avoid paying as much as $35 billion on its offshore profits, if its proposed inversion goes ahead as planned.

How is this possible? The ATF report shows that Pfizer has been using accounting gimmicks for many years to systematically shift its profits to its offshore subsidiaries. While Pfizer officially declares that it has $74 billion in earnings offshore for tax purposes, its real offshore cash could be as much as $148 billion based on its deferred tax liabilities declared in the company’s annual financial report. This means that Pfizer could get away without paying an estimated $35 billion in taxes on this enormous stash of offshore earnings if it is allowed to complete its planned inversion. Pfizer’s planned inversion will allow it to permanently shift this enormous stash of offshore earnings out of the US tax system and therefore allow it to avoid the $35 billion in taxes that it currently owes.

The ATF report rightly asserts that the Treasury Department could take regulatory steps that could reduce the tax benefits of inversion for Pfizer and other tax-averse multinationals. By tightening its 2014 rules governing “hopscotch loans,” ATF argues, the Treasury could help take away one of the largest incentives for Pfizer and other companies to invert.

But as University of Southern California Professor Ed Kleinbard noted (PDF) in testimony before a House Ways and Means Committee hearing on international tax reform earlier this week, we shouldn’t have to depend on regulatory reforms to end this tax-dodging charade. Congress has a much more direct path to ending sham inversions. Sadly, many representatives at this week’s hearing appeared more interested in holding a show trial on the alleged flaws of our corporate tax system than in constructing a sensible policy strategy for ending corporate tax avoidance.

Read the Americans for Tax Fairness full report here