13 bailed-out banks owe over $220 million in taxes
- From: "Kickin' Ass and Takin' Names" <populist348@xxxxxxxxxxx>
- Date: Fri, 20 Mar 2009 11:04:17 -0700 (PDT)
http://www.washingtonpost.com/wp-dyn/content/article/2009/03/19/AR2009031901456_pf.html
13 Bailed-Out Banks Failed to Pay Taxes
Revelation Stokes Lawmakers' Anger
By Amit R. Paley
Washington Post Staff Writer
Friday, March 20, 2009; D01
Thirteen of the largest recipients of the government's massive bailout
failed to pay more than $220 million in federal taxes, congressional
investigators said yesterday, prompting a new round of accusations
that banks were abusing the financial rescue program.
The Internal Revenue Service said late yesterday that a portion of the
money had been paid back since congressional investigators gathered
their information. Still, many in Congress were furious, noting that
firms with the largest tax liabilities owed $113 million and $102
million.
"This is shameful. It is a disgrace," said Rep. John Lewis (D-Ga.),
chairman of the House Ways and Means Committee's oversight
subcommittee, which examined the IRS data. "The American people are
fed up, and they are fired up. And they are not going to take it
anymore."
The head of the federal watchdog agency charged with prosecuting fraud
in the program said his office would investigate to see whether any
crimes had been committed by the firms, none of which were named.
Executives of banks receiving bailout funds had to certify that their
firms did not owe taxes, and if they knowingly lied, they could be
prosecuted.
The disclosures ratcheted up anger on Capitol Hill at both the conduct
of Wall Street firms benefiting from taxpayer dollars and the Treasury
Department's oversight of the program. Lawmakers are still furious
over multimillion-dollar bonuses to executives at firms receiving
bailout money as well as lavish retreats and expenses by those
companies.
"We're eroding confidence in the way taxpayer dollars are managed and
spent," said Rep. Artur Davis (D-Ala.). "And the cost of that? It's
going to make it harder than ever for us to do the things that must be
done to get this economy moving forward."
Neil M. Barofsky, the special inspector general for the bailout, said
it should have been the Treasury's responsibility to ensure that banks
were complying with the provisions of the bailout agreements. He said
his agency would work with Treasury officials to solve the problem.
Asked to respond, Treasury spokesman Isaac Baker said, "Companies
receiving government funds have certified to the federal government
that they have paid all applicable taxes and have no tax
deficiencies."
The tax data were released yesterday after Lewis's committee asked the
IRS for tax information on the 23 largest recipients of the $700
billion federal bailout.
IRS officials cautioned that the tax data represent a snapshot and
said there could be many reasons recipients have not paid. They said
that major corporations are constantly audited and therefore the
amounts of taxes due fluctuate.
"Given the complexity of corporate tax laws, people should not assume
that all these taxpayers have necessarily done something wrong," said
Frank Keith, an IRS spokesman. He said 50 percent of the $220 million
in unpaid taxes described to the panel this month had recently been
paid back, though he declined to describe the payments further or say
whether more unpaid taxes had accrued by the bailout firms since
then.
"The IRS recognizes that those entities that receive taxpayer support
have a special obligation to pay their taxes, and these taxpayer
accounts will remain closely monitored by the IRS to ensure that the
full amount of taxes due are paid," Keith said.
The Post asked the 23 largest recipients of bailout funds yesterday
whether they had any unpaid taxes. Spokesman for nine companies --
Bank of America, Wells Fargo, Citigroup, Capital One, Northern Trust,
CIT Group, Marshall & Isley Corporation, Chrysler, General Motors --
said they had none.
The remaining firms either declined to comment, did not return phone
and e-mail messages, or provided ambiguous responses.
Christina Pretto, a vice president for insurance giant American
International Group, wrote in an e-mail that the company "has paid all
taxes due and payable." But she added: "As is the right of every
taxpayer, AIG in good faith and in accordance with applicable law
contests the imposition of taxes to the extent that it believes they
are not legally owed." She did not respond to a request to explain
further.
A spokesman for PNC Financial said "there may be instances where we
are in discussion with the United States about specific items." BB&T
said it had no unpaid federal income taxes, but would not specify
whether it owed federal employment taxes. A Regions Bank official said
only that "our tax commitments are current."
The congressional anger came from both parties. Sen. Charles E.
Grassley (Iowa), the ranking Republican on the Senate Finance
Committee, said: "Unpaid tax liabilities damage confidence in our tax
system and, in this case, increase cynicism that there are two sets of
rules, one set for the big guys and one set for everyone else."
In a hearing yesterday to discuss oversight of the bailout, Lewis
raised the possibility that the unpaid taxes described in the data
were the tip of the iceberg.
"If we looked at all 470 recipients, how much would they owe?" he
said.
.
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