A.I.G. Sues U.S. for Return of $306 Million in Tax Payments

Maybe U.S. taxpayers can file a counter-suit for 'Return of 173 Billion?'

A.I.G. Sues U.S. for Return of $306 Million in Tax Payments

http://www.nytimes.com/2009/03/20/business/20aig.html?_r=1

By LYNNLEY BROWNING
Published: March 19, 2009

While the American International Group comes under fire from Congress over executive bonuses, it is quietly fighting the federal government for the return of $306 million in tax payments, some related to deals that were conducted through offshore tax havens.

A.I.G. sued the government last month in a bid to force it to return the payments, which stemmed in large part from its use of aggressive tax deals, some involving entities controlled by the company’s financial products unit in the Cayman Islands, Ireland, the Dutch Antilles and other offshore havens.

A.I.G. is effectively suing its majority owner, the government, which has an 80 percent stake and has poured nearly $200 billion into the insurer in a bid to avert its collapse and avoid troubling the global financial markets. The company is in effect asking for even more money, in the form of tax refunds. The suit also suggests that A.I.G. is spending taxpayer money to pursue its case, something it is legally entitled to do. Its initial claim was denied by the Internal Revenue Service last year.

The lawsuit, filed on Feb. 27 in Federal District Court in Manhattan, details, among other things, certain tax-related dealings of the financial products unit, the once high-flying division that has been singled out for its role in A.I.G.’s financial crisis last fall. Other deals involved A.I.G. offshore entities whose function centers on executive compensation and include C. V. Starr & Company, a closely held concern controlled by Maurice R. Greenberg, A.I.G.’s former chairman, and the Starr International Company, a privately held enterprise incorporated in Panama, and commonly known as SICO.

The lawsuit contends in part that the federal government owes A.I.G. nearly $62 million in foreign tax credits related to eight foreign entities, with names like Lumagrove, Laperouse and Foppingadreef, that were set up or controlled by financial products, often through a unit known as Pinestead Holdings.

United States tax law allows American companies to claim a credit for any taxes paid to a foreign government. But the I.R.S. denied A.I.G.’s refund claims in 2008, saying that it had improperly calculated the credits. The I.R.S. has identified so-called foreign tax-credit generators as an area of abuse that it is increasingly monitoring.

The remainder of A.I.G.’s claim, for $244 million, concerns net operating loss carry-backs, capital loss carry-backs, a general refund claim and claims for refunds of other tax-related payments that A.I.G. says it made to the I.R.S. but are now owed back. The claim also covers $119 million in penalties and interest that A.I.G. says it is due back from the government.

In part, A.I.G. says it overpaid its federal income taxes after a 2004 accounting scandal that caused it to restate its financial records. A.I.G. says in part that it is entitled to a refund of $33 million that SICO paid in 1997 as compensation to employees, which it now says should be characterized as a deductible expense.

A.I.G.’s lawyers in the case, at Sutherland Asbill & Brennan, referred calls to the company. Asked about the lawsuit, Mark Herr, an A.I.G. spokesman, said Thursday that “A.I.G. is taking this action to ensure that it is not required to pay more than its fair share of taxes.”

 

At what point will AIG finally come right out and say that it's being used as a front for the "boys" at treasury to continue giving billions to their "buddies" at the big banks?

AIG could have filed for BK protection, kept the majority of it's businesses operating, and let all the derivative shit just hit the fan. It wouldn't have killed them. It WOULD have killed their counterparties, GS, BAC, DB, etc. That is the ONLY reason they were given the 170bil. They will need more in the few months or so, only this time....the "boys" are gonna have a helluva time getting the same shit through Congress.

 

AIG is laundering taxpayer monies for the Gubmint, and whether Congress or the MSM is smart enough to grasp that fact, is very doubtful.

 

The NY Times story may not have gone far enough. The press has been focused on the mortgage related CDS transactions, but it seems only a handful of people in AIGFP were actually working on derivatives. I heard most of the unit was engaged tax avoidance arbitrage. Lobbying political and tax officials in various countries was part of the job.

Supposedly the top retnetion bonus went to the “energy” guy. AIG became the nominal owner on energy businessess for the tax credits.

Not sure if all of the above is correct, however.