UPDATE 2-Fortune 500 execs use 'tricks' to avoid U.S. taxes - activists

* Senator Wyden wants public hearing on international tax

* Cayman Islands, Bermuda common sites of shell companies

* U.S. multinationals avoid $90 bln/year in taxes - report

* Business-aligned research group says report "misleading"

(Adds Senator Wyden comments, paragraphs 8-10)

WASHINGTON, June 5 (Reuters) - Most Fortune 500 corporations have offshore tax haven units that they use to avoid paying U.S. taxes through "accounting tricks," two left-leaning tax activist groups said on Thursday.

U.S. multinationals each year avoid paying about $90 billion in federal income tax, the groups said in a report that comes amid increased attention to corporate tax avoidance worldwide.

"Many large, U.S.-based multinational corporations avoid paying U.S. taxes by using accounting tricks to make profits made in America appear to be generated in offshore tax havens - countries with minimal or no taxes," said Citizens for Tax Justice (CTJ) and U.S. Public Interest Research Group (PIRG).

About 72 percent of Fortune 500 companies had subsidiaries in low-tax jurisdictions in 2013, with most of these units located in the Cayman Islands or Bermuda, said the report.

"These subsidiaries are often shell companies with few, if any employees, and which engage in little to no real business activity," it said.

Big corporations regularly defend their tax planning practices as legal and in the best interest of shareholders, who want companies to pay as little tax as possible.

But fiscal constraints facing many governments, as well as a step-up recently in the aggressiveness of some corporate tax-avoidance strategies, have fueled a political backlash.


The U.S. Senate's top tax law writer said he will soon hold a hearing on international tax reform, with a specific type of corporate tax strategy likely to be a major focus.

Deals known as "inversions," in which a U.S. company moves its tax base to another country to cut its tax bills, are sure to come up at the hearing, Wyden told reporters.

"The pace of these inversions has accelerated," said the Senate Finance Committee chairman, a Democrat. "You really can't have a debate about the international aspects of the U.S. tax code without looking at inversions,"

The CTJ/PIRG report was criticized by the Tax Foundation, a business-aligned tax activist group, as "misleading."

"There's no doubt that U.S. corporations use a variety of legal methods to reduce their corporate tax bill on their overseas operations," the foundation said. "If we are going to reform our tax code, it is best to be informed by the best information available. This study doesn't cut it."

Earlier this week, the Paris-based Organization for Economic Co-operation and Development held a conference in Washington on its effort to rein in corporate tax avoidance, launched last year at the request of the G20 group of leading world economies.

The OECD project has a long way to go, with completion not expected until next year, and it will not have the force of law. But lawyers and accountants agree that changes are coming if national legislatures enact the OECD's recommendations.

PricewaterhouseCoopers, a major accounting firm, in a report last month discussed "a dramatic surge in international tax controversy" and forecast cross-border disputes would continue.

(Editing by Jonathan Oatis)