KPMG named as US wins three tax shelter cases
KPMG US named in one of three tax shelter cases won by the American government
THE US HAS WON three tax shelter cases, one involving KPMG.
In WFC Holdings, Minnesota district court judge John Tunheim disallowed an $80m (£51.7m) tax refund claim filed by a subsidiary of Wells Fargo.
The tax claim, relating to an alleged loss from a sale of stock, was ruled to be a “sham tax shelter” it had purchased from KPMG for $3m, and “that it had no business purpose other than tax avoidance“.
Another case saw a partnership classed as “sham” by the courts, blocking an attempt to deduct $200m in income tax deductions.
The third case saw Principal Life Insurance’s claim for more than $20m in foreign tax credits prevented. The transaction bringing rise to the claim, designed by Citibank, was deemed to be a loan rather than an equity investment, lacked economic substance and a business purpose – violating the US Treasury’s ‘anti-abuse’ regulation.
“These three significant decisions are further evidence that the courts will not countenance abusive tax shelters, no matter who designs them or how complicated they are,” said John DiCicco, principal deputy assistant attorney general of the Justice Department’s tax division.
“Large corporations and wealthy individuals should think twice before pouring money into these sham arrangements.”