The IRS says AIG had created an "elaborate series of sham transactions that were designed to do nothing — and in fact did nothing — other than generate hundreds of millions of dollars in ill-gotten tax benefits for AIG." (Photo: Ryland West/ALM)
AIG has agreed to forfeit claims to more than $400 million in foreign tax credits and to pay a 10% penalty to settle a long-running tax shelter lawsuit related to seven cross-border transactions from the mid-1990s, the Manhattan U.S. Attorney's Office announced on Friday (Oct. 23).
Acting U.S. Attorney Audrey Strauss said in a statement that the U.S. had uncovered "overwhelming evidence" that the insurance company's financial products unit had used the complex transactions to generate bogus credits on foreign taxes that it did not actually pay, in order to reduce the firm's liability in the 1997 tax year.
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Tom McParland
Tom McParland of New York Law Journal can be contacted at [email protected]. Follow him on Twitter @TMcParlandALM.
