U.S. Treasury says it will soon target tax inversion

U.S. Treasury Secretary Jack Lew has put companies looking to avoid U.S. corporate taxes by moving overseas on notice.

"This practice allows the corporation to avoid their civic responsibilities, while continuing to benefit from everything that makes America the best place in the world to do business. ... This may be legal, but it's wrong. And our laws should change."

In a speech given at the Urban Institute Monday, Lew urged Congress to address the problem, known as inversion, through comprehensive tax reform. But he also warned the Treasury would act independently to crack down on inversions "in the very near future." (Video via CNBC)

Tax inversion, which involves a company relocating its headquarters to a lower-tax nation while still maintaining their U.S. operations, has become a relatively common practice over the last few years. Fast food giant Burger King is the latest corporation accused of inversion after its merger with Canadian coffee chain Tim Hortons.

Lew didn't give many specifics about what anti-inversion policies would look like or when they would be enacted. But Bloomberg's Peter Cook says the Treasury's options are mostly limited to making the move less attractive.

"They have several ideas on the table, I'm told, at the Treasury Department. They haven't decided on one single fix. But Lew's message this morning was: we can only do this at the margins. Only Congress can have a real, long-term fix here."

But the issue seems unlikely to make any real progress in Congress, at least for a while. Democratic Sen. Charles Schumer is reportedly working on a bill that would curb corporate inversions - and would apply retroactively on deals stretching back to 1994.

That's a bitter pill for many GOP members to swallow, especially since most of them argue inversion reform should be part of a larger tax code overhaul that cuts the corporate tax rate. It's unlikely such a measure would pass Congress just before the midterm elections.

Forbes Media Chairman Steve Forbes told Fox Business Democrats are looking for political points by tackling inversion.

"They've done polling, they know people don't like the idea of companies dodging taxes. ... They hope there's Republican opposition they can use against them."

The Obama administration estimates there are currently dozens of inversion deals in the works which have yet to be announced. Lew urged Congress to make any legislative fix for inversion to retroactively apply to all deals since this May - which would cover the Burger King-Tim Hortons merger, among other big deals.

This video contains images by Getty Images.