Saturday, January 08, 2011

IRS Takes Nissan to Court Over Bermuda Tax Shelter

The IRS recently won a federal case against Nissan North American, when a federal court ordered the automaker to surrender paperwork on contracts worth $45.9 million. The company has been battling the IRS for months because of their tax complicated international tax strategy. The crackdown on evasion, and even tax avoidance, is gaining steam. We’ll see what pans out, but expect to see more stories like this.

Jalopnik reports:

    Nissan denies any wrongdoing, and has been fighting with the IRS since March over the paperwork, saying the IRS was on "the epitome of a fishing expedition." But U.S. District Judge Todd Campbell in Nashville ordered Nissan to cough up the documents, saying the automaker's arguments weren't persuasive.

    In court filings, the IRS doesn't say how much it thinks Nissan's North American arm avoided paying in taxes, or spell out exactly which of the numerous techniques corporations use to avoid U.S. taxes Nissan might have used. The data it wants involve Nissan's contracts with 31 accounting, insurance and law firms, covering taxes filed in fiscal 2006 and 2007.

    According to the agency:

    "The IRS has reason to believe that Nissan has moved all or some of its U.S. extended service contract business offshore to Bermuda, a tax haven country, with the possible purpose of structuring payments to outside professionals so as to avoid U.S. taxation of the company's gross receipts."

Read more here

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