New York (HedgeCo.Net) – A year-long probe launched by a U.S. Senate Committee has discovered that numerous Wall Street banks have assisted offshore hedge funds in evading millions of dollars in U.S. taxes. The Permanent Subcommittee on Investigations has concluded that Lehman Brothers, Morgan Stanley, Merrill Lynch, UBS, Citigroup and Deutsche Bank created products to skirt a law that required them to withhold the 30 percent tax on stock dividends paid to offshore investors. <\/p>\n
While the IRS apparently turned a blind eye, the actions taken by the bank allowed these funds to sell their shares to the bank while entering into a swap contract that paid a fee to the banks in exchange for the amount of the dividend plus any gains.<\/p>\n
"Major financial institutions have devised complex financial structures to enable their offshore clients to dodge U.S. dividend taxes," Democratic Senator Carl Levin of Michigan said in a statement Wednesday. "We need legislation to take these abusive tax-avoidance gimmicks off the market, and we need to end the silence and inaction of the Treasury and IRS in the face of rampant dividend tax dodging."<\/p>\n
Levin went on to say, ““We are going to press the IRS to go after what is obviously a scheme.” “The IRS should be going after this. They are not.”<\/p>\n
The Committee found that Lehman Brothers clients were able to avoid about $115 million in taxes in 2004, while total losses to U.S. revenue are estimated to be around $100 billion a year. These dividend-enhancement products earned UBS about $5 million in 2005 and $4 million for Deutsche Bank in 2007, according to the report. Morgan Stanley also raked in $25 million in revenue from the products in 2004.<\/p>\n
"We believe we acted in good faith when we advised our clients and believe we acted appropriately under existing tax law," said William Halldin, spokesman for Merrill Lynch. <\/p>\n
IRS spokesman Frank Keith came to the defense, stating, “The IRS intends to aggressive pursue transactions that it believes to be abusive.”<\/p>\n
Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net <\/p>\n
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New York (HedgeCo.Net) – A year-long probe launched by a U.S. Senate Committee has discovered that numerous Wall Street banks have assisted offshore hedge funds in evading millions of dollars in U.S. taxes. The Permanent Subcommittee on Investigations has concluded […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11,3],"tags":[646,2622,1551,2633,110,1943,96,2623,2621,2632,103,2630,2634,2631],"class_list":["post-8589","post","type-post","status-publish","format-standard","hentry","category-hedge-fund-fraud","category-hedgeco-news","tag-arthur-sulzberger","tag-asset-growth","tag-connecticut","tag-dividend-tax","tag-due-diligence-service","tag-giuliani","tag-lehman-brothers-holdings","tag-margin-lending","tag-mi","tag-michigan-democrat","tag-pergam-finance","tag-stock-dividends","tag-stock-loan","tag-yearlong-probe"],"_links":{"self":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/8589","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/comments?post=8589"}],"version-history":[{"count":0,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/8589\/revisions"}],"wp:attachment":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/media?parent=8589"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/categories?post=8589"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/tags?post=8589"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}