Enron case bolsters US anti-tax shelter moves
As expected, Enron has provided ammunition for the opponents of offshore financial services.
The case is also providing ammunition against those who create and promote tax shelter schemes, including investment banks, lawyers and accountants.
A report some 2,700 pages long details schemes used by the company to reduce its corporate taxes - and shows that the group paid no federal taxes on income from for the four years 1996-1999.
Senator Charles Grassley, Republican chairman of the Senate Finance Committee, has said "The day of reckoning has come, I think, for shelter promoters. We have to hunt them down, we have to shut them down and do whatever it takes to purge that cancer from our system. It may take years or it may take only months."
The Joint Committee report recommends that there be "a broad array of sanctions" available to both the Inland Revenue Service and the Treasury Department, applicable to those who advise and facilitate tax structures that have no purpose other than tax avoidance.
In presenting the Report, Grassey said that others should not treat it as a tax avoidance or evasion manual - that the loopholes described would be closed very shortly. The size and complexity of the schemes is such that the IRS has not been able to determine the true tax position nor even if the schemes were legal or illegal.
The insolvency examiner overseeing the Enron liquidation has filed his report with the Court but it is at present sealed whilst the Court considers it and decides how best to release such a document as the costs of production would be substantial. The 1500 page report was expected to be released later today but it is understood that the Court has said it needs more time. The report is expected to examine some of the tax deals and to make criticism of some of the advisers who not only promoted the schemes but even took positions in them.
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