CNN: Did Romney enable Marriott International's abusive tax shelter?

http://www.cnn.com/2012/08/08/opinion/canellos-kleinbard-romney-taxes/index.html

Romney has had a close, long-standing, personal and business connection with Marriott International and its founders. He served as a member of the Marriott board of directors for many years. From 1993 to 1998, Romney was the head of the audit committee of the Marriott board.

During that period, Marriott engaged in a series of complex and high-profile maneuvers, including "Son of Boss," a notoriously abusive prepackaged tax shelter that investment banks and accounting firms marketed to corporations such as Marriott. In this respect, Marriott was in the vanguard of a then-emerging corporate tax shelter bubble that substantially undermined the entire corporate tax system.

Son of Boss and its related shelters represented perhaps the largest tax avoidance scheme in history, costing the U.S. many billions in lost corporate tax revenues. In response, the government initiated legal challenges that resulted in complete disallowance of the losses claimed by Marriott and other corporations.

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In his key role as chairman of the Marriott board's audit committee, Romney approved the firm's reporting of fictional tax losses exceeding $70 million generated by its Son of Boss transaction. His endorsement of this stratagem provides insight into Romney's professional ethics and attitude toward tax compliance obligations.

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The authors of this opinion piece (Peter C. Canellos, former chair of the New York State Bar Association Tax Section, and Edward D. Kleinbard, former chief of staff of Congress's Joint Committee on Taxation) point out that this was "an entirely artificial transaction, bearing no relationship to its business. Its sole purpose was to create a gigantic tax loss out of thin air without any economic risk, cost or loss -- other than the fee Marriott paid the promoter."

The IRS listed this as "an abusive transaction, requiring specific disclosure and subject to heavy penalties" and the government brought successful criminal prosecutions against a number of individuals involved.

The authors point out that Romney has to have been aware of what was going on. His campaign has tried to claim that he was simply relying on Marriott's own tax department and advisers, but the authors point out that normally someone in Romney's position would have sought advice from independent tax counsel, who would have warned against this. And Romney himself "had an insider's perspective on the motivation and lack of substance in the transaction, as well as the financial sophistication to understand the tax avoidance involved."