Scarinci Hollenbeck, LLC
The Firm
201-896-4100 info@sh-law.comFirm Insights
Author: Scarinci Hollenbeck, LLC
Date: February 27, 2013
The Firm
201-896-4100 info@sh-law.comThe Internal Revenue Service won a major victory in a high-profile tax shelter case that may carry costly implications for multinational corporations.
A federal U.S. Tax Court handed down a ruling that bars Bank of New York Mellon from claiming millions of dollars in foreign tax credits arranged by Barclays. The case involves complex tax shelters, known as Structured Trust Advantaged Repackaged Securities, which essentially generate artificial tax credits for companies. The IRS has argued against six banks that have participated in this practice, namely because the complexity of these arrangements can leave a great deal of room for potential tax law violations.
The tax court agreed with the IRS and noted that the transaction was the result of “pre-arranged steps designed as a subterfuge for generating, monetizing and transferring the value of foreign tax credits among the STARS participants,” according to the Financial Times.
“The Stars transaction was a complicated scheme centered around arbitraging domestic and foreign tax law inconsistencies,” the court added.
BNY Mellon said it plans to appeal the ruling, but will accept after-tax charges amounting to roughly $850 million as a result of the court decision.
“We will appeal the court’s decision,” a spokesman said, according to the Washington Post. “We continue to believe the tax treatment of the transaction was consistent with statutory and judicial authority existing at the time.”
The court ruling may carry long-term tax implications for other banks that have drawn the ire of the IRS for this practice. The U.S. banks in question that entered into Stars transactions with Barclays participated in these deals between 1999 and 2006. As the IRS seeks to close the $385 billion tax gap, the deals of the other banks the IRS is examining amounts to roughly $2 billion.
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Corporate transactions can have significant implications for a corporation and its stakeholders. For deals to be successful, companies must act strategically to maximize value and minimize risk. It is also important to fully understand the legal and financial ramifications of corporate transactions, both in the near and long term. Understanding Corporate Transactions The term “corporate […]
Author: Dan Brecher
Ongoing economic uncertainty is forcing many companies to make tough decisions, which includes lowering staff levels. The legal landscape on both the state and federal level also continues to evolve, especially with significant changes to the priorities of the Equal Employment Opportunity Commission (“EEOC”) under the Trump Administration. Terminating an employee is one of the […]
Author: Angela A. Turiano
While filing annual reports may seem like a nuisance, failing to do so can have significant ramifications. These include fines, reputational harm, and interruption of your business operations. In basic terms, “admin dissolution for annual report” means that a company is dissolved by the government. This happens because it failed to submit its annual report […]
Author: Dan Brecher
Antitrust laws are designed to ensure that businesses compete fairly. There are three federal antitrust laws that businesses must navigate. These include the Sherman Act, the Federal Trade Commission Act, and the Clayton Act. States also have their own antitrust regimes. These may vary from federal regulations. Understanding antitrust litigation helps businesses navigate these complex […]
Author: Robert E. Levy
If you’re considering closing your business, it’s crucial to understand that simply shutting your doors does not end your legal obligations. Unless you formally dissolve your business, it continues to exist in the eyes of the law—leaving you exposed to ongoing liabilities such as taxes, compliance violations, and potential lawsuits. Dissolving a business can seem […]
Author: Christopher D. Warren
Contrary to what many people think, corporate restructuring isn’t all doom and gloom. Revamping a company’s organizational structure, corporate hierarchy, or operations procedures can help keep your business competitive. This is particularly true during challenging times. Corporate restructuring plays a critical role in modern business strategy. It helps companies adapt quickly to market changes. Following […]
Author: Dan Brecher
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!