Banks Moved Billions to Shelter Income From Taxes

http://news.yahoo.com/news?tmpl=story2&cid=808&u=/dowjones/20030807/bs_dowjones/200308070103000036&printer=1

Some of the nation's biggest banks have sheltered hundreds of millions of dollars from state taxes by creating investment funds that didn't sell shares publicly but paid tax-exempt dividends to the banks, Thursday's Wall Street Journal reported.

A review of Securities and Exchange Commission (news - web sites) records shows that at least 10 major banks shifted more than $17 billion into such funds. Bank of America Corp. (BAC) alone transferred at least $8 billion into its fund, sheltering more than $750 million in income from 1999 through last May. The banks contend the funds were legitimate vehicles for raising investment capital, but many appear to have served little purpose beyond sheltering income. In effect, the funds converted interest income from the banks' loan portfolios into tax-exempt dividends.

All but one of the known funds -- 11 in all -- were set up with advice from KPMG LLP, an accounting firm whose tax shelter practices are under scrutiny by the Internal Revenue Service (news - web sites). They were created in 1999 and 2000, but have been gradually shut down over the last two years, after the SEC and California revenue officials quietly began looking into the practice. It is not known if more such funds remain active. California officials, calling the maneuver " outrageous" and "egregious," are auditing several banks' tax returns in an effort to recoup lost revenues and looking as far back as 1993. The officials declined to identify the banks, citing tax-confidentiality laws.

"We do not believe this is appropriate," California controller Steve Westly said of the funds. "This is something we need to fix." New York State tax authorities also are examining the issue. It's unclear how many other states might be affected.

in a night from businessmen/corporate america whose companies are NOT fairing well in this economy, who might be gravely aware of the longterm fiscal damage to this country being done by the policies of WandDick, but who want to protect their ability to hide money and not pay taxes.

Who is UnAmerican again?

as well. Between this and the energy crisis how can anyone think this is a free for all rather than a concerted collective effort to permanently drain power from the people.

How much money would have gone into state treasuries that didn't? How many services were cut as a result?

The BFEE at its best......

God.......when are we the people going to take this country back? We are being raped and pillaged blind..................

As our right wing govt gets more fanatical, so too will corporations.

Remember their mantra of the 80's - "greed is good."