NYT: Bain’s TAX “DODGING” Is "NOT LEGAL," “Subject To Serious I.R.S. Challenge”
Today’s NYT piece provides us with a deeper dive about complex U.S. offshore tax law(s), and how those laws apply to the Romney family’s primary investments in Bain Capital. Specifically, the Times report tells us that these questionable an/or illegal tax strategies directly apply to “large parts of his [Mitt Romney’s] personal fortune.” The story includes quite unminced commentary from tax law professors--Victor Fleischer at the University of Colorado and Gregg D. Polsky at the University of North Carolina School of Law--who indicate that Bain Capital’s “aggressive” tax strategies are illegal and/or “subject to serious I.R.S. challenge,” respectively.
Getting slightly granular here, and just so we’re clear, we’re talking about “questionable” or illegal strategies (depending upon whose opinions you follow) with regard to the “reclassification” of more than $1 billion in payments to Bain Capital partners. So here are the links and excerpts from the NYT and from the experts, themselves, telling us in plain English that, when it comes to the one percent’s tax avoidance (legal) and/or evasion (illegal) strategies, “This is how they do it.”
By NICHOLAS CONFESSORE, FLOYD NORRIS and JULIE CRESWELL
New York Times
August 24, 2012
…Bain private equity funds in which the Romney family’s trusts are invested appear to have used an aggressive tax approach, which some tax lawyers believe is not legal, to save Bain partners more than $200 million in income taxes and more than $20 million in Medicare taxes.
Annual reports for four Bain Capital funds indicate that the funds converted $1.05 billion in accumulated fees that otherwise would have been ordinary income for Bain partners into capital gains, which are taxed at a much lower rate.
Although some tax experts have criticized the approach, the Internal Revenue Service is not known to have challenged any such arrangements.
In a blog post Thursday, Victor Fleischer, a law professor at the University of Colorado, said that there was some disagreement among lawyers, but that he believed: “If challenged in court, Bain would lose. The Bain partners, in my opinion, misreported their income if they reported these converted fees as capital gain instead of ordinary income…”
…
…In an article that appeared in the journal Tax Notes in 2009, Gregg D. Polsky, a tax law professor at the University of North Carolina School of Law, called the tax strategy “extremely aggressive” and said it was “subject to serious challenge by the I.R.S…”
http://www.nytimes.com/2012/08/24/us/politics/documents-show-details-on-romney-family-trusts.html?_r=1&pagewanted=all
The article continues on to inform us that the just-released documents: “…showed that some of the funds owned equity swaps, which have been used to avoid taxes that would otherwise be owed on dividends paid by American companies to foreign-based investors, like funds based in the Caymans.” The intent here, according to the article: “The major purpose of such ‘swaps,’ a Senate committee report stated in 2008, ‘is to enable non-U.S. persons to dodge payment of U.S. taxes on U.S. stock dividends.’”
Bain Capital, a group of artful dodgers, indeed.
http://www.dailykos.com/story/2012/08/24/1123694/-NYT-Bain-s-tax-dodging-is-illegal-subject-to-serious-I-R-S-challenge
= new reply since forum marked as read
was UNTHINKABLE, and then there was judith miller!!!
So?
This is so UnAmerican what Romney is doing.
money can buy), but it's so unAmerican. As a DUer pointed out to me, look at all the revenue we're losing and how it's adding to the deficit. Doesn't seem like this guy cares about America, yet he wants to be its commander in chief. 
the fan blades. 
