Wednesday, October 15, 2008
Bank Dividend Tax Scam
"Some of the country's biggest investment banks and brokerage firms--including Morgan Stanley, Lehman Brothers Holdings Inc., Citigroup Inc., and Merrill Lynch & Co.--marketed allegedly abusive transactions that helped foreign hedge-fund investors avoid billions of dollars in U.S. taxes over the past decade, according to Senate investigators. ... Some of the internal emails show that bank officials and hedge-fund managers were concerned the deals might run afoul of the [IRS]. ... The report is critical not only of banks and hedge funds, but also of the IRS and the Treasury Department for what the committee calls a failure to enforce the tax law governing this area. ... However, Senate investigators found that the investment banks commonly entered into arrangements to give hedge funds the economic value of dividends, without actually triggering a withholding tax on dividend payments. ... In one email, a Lehman official said: 'Personally, I would not prepare anything and leave a trail.' ... The report says a $32 billion special dividend by Microsoft Corp. in 2004 spurred many of the big banks to sell products that would allow their hedge-fund clients to avoid paying the associated taxes", Jesse Drucker at the WSJ, 11 September 2008.
Who, if anyone will be indicted for this? Did Henry "formerly" of Goldman Sachs Paulson, strong-arm the IRS into ignoring this? Well Henry? Where were the Big 87654 when this went on? Did anyone from the Big 87654 review these transactions and tell the banks: record tax liabilities on these things? Imagine, I've had individuals audited over $2,100 deductions and the IRS did not have time to find this.