"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."
During Romney’s tenure as a Marriott director, the company repeatedly utilized complex tax-avoidance maneuvers, prompting at least two tangles with the Internal Revenue Service, records show. In 1994, while he headed the audit committee, Marriott used a tax shelter known to attorneys by its nickname: “Son of BOSS.”
A federal appeals court invalidated the maneuver in a 2009 ruling, siding with the U.S. Department of Justice, which called Marriott’s transaction and attempted tax benefits “fictitious,” “artificial,” “spectral,” an “illusion” and a “scheme.” Marriott had argued the plan predated government efforts to close such shelters.
Employing another strategy, Marriott legally avoided hundreds of millions of dollars in income taxes thanks to a federal tax-credit program criticized and allowed to expire by Congress. Marriott has also shifted profits to a Luxembourg shell company. During Romney’s years on the board, Marriott’s effective tax rate dipped as low as 6.8 percent, compared with the federal corporate statutory rate of 35 percent.
Son of BOSS is the informal name for a type of tax shelter used in the United States, one that was designed and promoted by tax advisors in the 1990s to reduce federal tax obligations on capital gains from the sale of a business or other appreciated asset. "BOSS" is an acronym for "bond and option sales strategy", a earlier tax shelter that Son of BOSS resembled.
The term was coined by Treasury officials to describe a variety of tax shelters that sought to wipe out taxes on capital gains from the sale of a business or other appreciated asset, for example, by artificially inflating the cost of an asset to make the profit from its sale appear smaller. The shelters involved creating paper losses to offset real gains. All resembled an earlier shelter marketed as "BOSS," short for "bond and option sales strategy." The Son of BOSS transaction was marketed in various forms by advisers at some accounting and law firms beginning in the late 1990s. Several thousand taxpayers likely used the shelter before the Treasury and Congress took steps to block its tax benefits, beginning in 2000.
The "Son of BOSS" schemes involved 1,800 people and cost the government $6 billion in lost revenue, according to Internal Revenue Service (IRS) estimates. Of that total, the government has recovered more than half. The IRS started cracking down on "Son of Boss" in 2000. By 2005, 1,165 people had settled Son of BOSS cases with the IRS, but the complex structures used in the schemes were hard for the IRS to unravel and it was losing some court challenges to its crackdown.
How is anything more clear? I don't understand.
it makes it much more clear just why he won't divulge his tax records.
This may be a little off-topic, but may I offer my current (subject to change) opinion on his tax returns?
I am absolutely sure, as much as I am of anything, that the current administration has ordered the IRS to conduct a fine-tooth comb audit of Romney's returns. If anything odd has turned up, the administration knows about it. The leads me to one of two conclusions. Either those returns are squeaky clean, or the administration is holding off until the politically opportune time arrives.
Right now, only the IRS has the returns and unless there is an official action, they can't be legitimately criticized or discussed. If Romney makes them public, then anyone can say whatever they want about them, true or false, and he has to spend the rest of the campaign dealing with that instead of national issues, or Obama's record.
During his time on the committee, Marriott implemented the Son of BOSS shelter attacked by the Department of Justice, bought a synthetic fuels business reliant on tax credits criticized by Congress as a tax shelter and took deductions that eventually led to a $220 million settlement with the IRS on another issue.
Given Romney’s background as chairman of Bain Capital, governor of Massachusetts and business experience with leverage buy-outs and hedge funds, it is not credible that he believed the tax shelter was legitimate. Under Romney’s watch, IRS disallowed the deductions and Marriott fought the case in court. The U.S. Department of Justice denounced the shelter as “fictitious,” “artificial,” “spectral,” an “illusion” and a “scheme.”
Note: Years later, the international accounting firm, KPMG, pled guilty to tax crimes in association with the Son of Boss tax shelter and entered a deferred prosecution agreement with the government. Also, there have been criminal indictments of others who aggressively promoted the scheme, although to date, none of the clients who participated in the tax shelter, including Marriott, has been implicated in criminal activity.
The Son-of-Boss ploy was presented by an investment banker to the tax department at Marriott in January, 1994. It involved generating a $71 million tax loss through a series of phony transactions involving the sale of $81 million in mortgage notes through partnerships created solely for the purpose of executing the tax shelter. IRS disallowed the loss and Marriott sued in the U.S. Court of Claims, which ruled in IRS’s favor., Marriott v U.S., 83 Fed Cl. 291 (2008). The company then appealed and the court of appeal sided with IRS, rejecting Marriott’s claim that the transaction was legitimate, Marriott v U.S., 586 F3d 962 (2009).
$220 million settlement with the IRS. Boy was I off!
Disagreement one. I have never worked for any company or agency that has demanded personal tax information, and I don't know anyone who has. It was a part of a clearance investigation, but I don't believe companies, especially a dozen years ago required personal tax information on their employees.
there would be a large number of bookkeepers, auditors, CPAs, partners, investors from his days at Bain that would also have a large amount of financial records on Romney. Anyone doing business with Bain Capital would have done "due diligence" prior to investing with them and be given some information as well,
Disagreement two. I believe Nixon started it with audits of people on his enemies list. Here's a source (granted it's conservative, but no liberal would touch it) that includes information about audits on some state Tea Party and other groups' audits. www.humanevents.com...
I don't agree that Obama or anyone in the WH could just "order" the IRS to go over his records with a "fine-tooth comb". Anymore than Bush could have ordered that done to John Kerry back in 2004 or Al Gore in 2000.
But still I disagree that they were personal financial disclosures.
Romney had a LOT of business entanglements, 100's of deals, maybe 1000's. Lots and lots of financial disclosures over all those years.
So would I if I had decided not to spread my returns over the press.
Look at it this way, when he was asked point blank by the press (by Anderson Cooper) if he ever paid LESS than 13.9% in taxes in the previous 10 years prior to 2010, he refused to answer.
Romney knows he didn't pay any taxes for ten years? How could you possibly know that? Besides, nobody at Bain would have done his personal taxes. He wouldn't spread around the office the details of his salary, his personal investments, and the like to his employees. I've never seen that happen anywhere. Why do you think they were done at Bain? One more, last minute thought. If the leak was somebody from his Bain days, why would that person know about the more recent taxes?
He knows the answer is "yes". He knows he paid 0% in 2009. He knows the person who leaked to Reid that he didn't pay any income tax at all for the last 10 years prior to 2010 is someone he knows very well from his Bain days. When you are at that level in the business world, it hard to keep your personal finances 100% secret. Too many people have to handle your complex filings.
To give but one example, there is a Bermuda-based entity called Sankaty High Yield Asset Investors Ltd., which has been described in securities filings as “a Bermuda corporation wholly owned by W. Mitt Romney.” It could be that Sankaty is an old vehicle with little importance, but Romney appears to have treated it rather carefully. He set it up in 1997, then transferred it to his wife’s newly created blind trust on January 1, 2003, the day before he was inaugurated as Massachusetts’s governor. The director and president of this entity is R. Bradford Malt, the trustee of the blind trust and Romney’s personal lawyer. Romney failed to list this entity on several financial disclosures, even though such a closely held entity would not qualify as an “excepted investment fund” that would not need to be on his disclosure forms. He finally included it on his 2010 tax return. Even after examining that return, we have no idea what is in this company, but it could be valuable, meaning that it is possible Romney’s wealth is even greater than previous estimates. While the Romneys’ spokespeople insist that the couple has paid all the taxes required by law, investments in tax havens such as Bermuda raise many questions, because they are in “jurisdictions where there is virtually no tax and virtually no compliance,” as one Miami-based offshore lawyer put it.
Originally posted by charles1952
Did I misunderstand your quotes? They seem to say that Romney left Mariott in 1998. At the time they and 1800 taxpayers were using the same method which was legal at the time. Congress started changing the rules in 2000 to prevent this from happening any more, and the IRS issued a regulation prohibiting it in 2009.
And this implicates Romney in wrongdoing?
If we adopt your standard for politicians, I'm afraid we'll be looking at blank ballots in November.
no one is saying he did anything illegal...just very slimy and suspicious looking.
Prosecutors said the alleged scheme involved tips on Bain Capital Partners LP's and Huawei Technologies Co Ltd's failed takeover of computer network equipment maker 3Com Corp, and private equity firm TPG Capital LP's takeover of Canadian drug company Axcan Pharma Inc.
Zvi Goffer, 34, pleaded not guilty to 12 counts of securities fraud and two counts of conspiracy.
Emanuel Goffer, 32, and Kimelman, 40, each pleaded not guilty to two counts of securities fraud and one count of conspiracy. The defendants face as much as 25 years in prison if convicted.
Leavitt FoundationLeavitt's family charitable foundation, the Dixie and Anne Leavitt Foundation, was established by the Leavitt family in 2000, and the family has donated nearly $9 million of assets to it since. It has provided them with tax write-offs for the donated assets. About a third of the foundation's assets have been loaned back to family businesses, such as a $332,000 loan to Leavitt Land and Investment Inc., in which Mike Leavitt has a substantial interest. According to a 2006 National Public Radio report, these loans were legal because they were made at market rates. A month following the NPR report, Congress made such transactions illegal.
The same NPR report also revealed that nearly $500,000 in charitable contributions provided to the Southern Utah Foundation were used for housing scholarships to Southern Utah University. The scholarships were subsequently used to place students in the Cedar Development Co., a Leavitt family business, with the money used to pay the students' rent. NPR's investigation found that the arrangement was legal and that the Leavitts did not profit from the arrangement. Although legal, the procedure, called "round-tripping" in philanthropic circles, has garnered criticism as lacking in the spirit of philanthropy. The report also stated that Mike Leavitt was not directly involved in the foundation's operations.
Total charitable grants from the foundation during its first six years were $1,468,055. The foundation's principal beneficiaries have been Southern Utah University and The Church of Jesus Christ of Latter-day Saints. Other beneficiaries have included arts, educational and humanitarian organizations, including the Leavitt family genealogical society.