Senators on a key tax panel demanded a crackdown on offshore tax havens in the wake of a new report that one building in the Cayman Islands is used as a business address for more than 18,000 companies.

Congressional scrutiny of the offshore tax vehicles used by companies, investment funds and wealthy individuals is increasing. A study by a separate Senate panel last week calculated that offshore abuses cost the U.S. government $100 billion a year in lost tax revenue.

“We’re going to find a way to make a huge dent in this problem,” said Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee.

The Government Accountability Office, Congress’ investigative arm, said in a report released Thursday that the Ugland House, a five-story building in the Caymans, is used by 18,000 companies, 5 percent of which are U.S.-owned.

Another 40 percent to 50 percent have a U.S. billing address or other connection, the report said. More than 700 publicly-traded U.S. companies are incorporated in the Caymans, according to the GAO.

Michael Brostek, director of tax issues for the GAO, said many of the entities are hedge funds or other investment vehicles. Some of the strategies used by large multinational companies, such as setting up subsidiaries in the Caymans, are legal, while others are not, he said.

Baucus said the Senate had previously looked into the Ugland House in 2004, when more than 12,000 companies used it as a business address.

“Remarkably, in the last four years, the Ugland House has found room for 6,000 new tenants, without even adding a new floor,” Baucus said.

The Caymans, a British territory with 47,000 residents, has two registered companies for every citizen, and a mutual fund or hedge fund for every five residents, Baucus added.

The Ugland House is home to international law firm Maples and Calder. The firm said in a statement Thursday that there were legitimate reasons for companies to register in the Caymans, such as its tax-free status.

The law firm also said “it is not unusual” for thousands of businesses to use the same address, pointing out that more than 200,000 entities are registered at one address in Wilmington, Del.

Several senators criticized the Internal Revenue Service for not taking a tougher approach against offshore havens.

“I don’t think you’re taking this seriously,” said Sen. Kent Conrad, D-N.D.

Frank Ng, director of the IRS’s large and mid-sized businesses division, said the agency is stepping up its enforcement efforts and has dedicated 1,500 employees to international tax enforcement.

“We know this is a significant compliance problem for us,” he said, adding that offshore havens cost U.S. taxpayers billions of dollars. He would not make a more specific estimate.

Recently, Congress has taken some steps to close tax loopholes.

Last month, President Bush signed legislation that prevents defense contractors, such as KBR Inc. and Combat Support Associates, from avoiding Social Security and Medicare taxes by setting up subsidiaries in the Cayman Islands.

Conrad on Thursday also criticized Swiss bank UBS AG, which is being investigated by the Justice Department for allegedly helping wealthy Americans shelter assets in offshore accounts.

A former UBS employee, who has pleaded guilty as part of the investigation, has said in court that UBS has about $20 billion in assets in undeclared accounts.

U.S. taxpayers are required to report all foreign financial accounts if their value exceeds $10,000. Failure to report the accounts can result in a penalty of as much as 50 percent of their amount.

Baucus said the committee had invited UBS representatives to testify but the company declined.

Karina Byrne, a UBS spokeswoman, said the company is “in dialogue” with the committee.

Separately, New York Attorney General Andrew Cuomo on Thursday sued UBS for misleading investors about the potential risks of the auction-rate securities market. Many banks, including UBS, promoted the securities as exceptionally safe and liquid, but some buyers were left holding the bag when the $330 billion market collapsed last winter.