Friday, June 05, 2015

Bad Tax Shelters

In the 1990’s and early 2000’s the tax landscape in the United States was overrun by an epidemic of tax shelters that was unprecedented. The shelters were designed and sold by seemingly reputable large accounting and law firms. The same shelters were sold to many taxpayers. They became generic, off-the-shelf, products. However, the tax shelters had no business substance. The shelters were eventually found to be invalid by the courts. In light of the invalidity of the shelters, the large fees paid for the shelters and the large damages caused by participating in the invalid shelters, there were predictions that many malpractice suits against the sellers of the shelters would ensue.
Bloomberg:  Wal-Mart Has $76 Billion in Undisclosed Overseas Tax Havens, by Jesse Drucker & Renee Dudley:
Wal-Mart Stores Inc. owns more than $76 billion of assets through a web of units in offshore tax havens around the world, though you wouldn’t know it from reading the giant retailer’s annual report.
new study has found Wal-Mart has at least 78 offshore subsidiaries and branches, more than 30 created since 2009 and none mentioned in U.S. securities filings. Overseas operations have helped the company cut more than $3.5 billion off its income tax bills in the past six years, its annual reports show.

The Swiss government and hundreds of Swiss banks have been roiled by the U.S. crackdown on American tax evaders. With six years of almost non-stop hits to the country and its bankers, it may be no surprise that now Switzerland is publishing the names of foreign tax evaders. Some observers are calling this the real and final end of Swiss bank privacy tradition, which mostly dates to the 1930s. Deutsche Welle has cited the Swiss media Sonntagszeitung for the news, saying that the Swiss government will list the names, birthdates and nationalities of alleged tax evaders in its federal newspaper.