TALLAHASSEE, Fla. – Revenue collectors in states such as California, Utah and North Carolina aren't the only ones that want to know just how involved banks in their states have been in setting up registered investment company accounts to use as tax shelters to reduce their income taxes. The Florida Credit Union League was notified that the Florida Department of Revenue is also looking into the issue that was raised in an Aug. 7 article in the Wall Street Journal. FCUL Vice President of Communication Mark Ivester received an e-mail from FDOR spokesman Dave Bruns that stated his department "had been aware of some of the issues raised in the (Wall Street Journal) story" and he had forwarded it to the FDOR's compliance section for review. "I can't go into very much detail about this because of confidentiality issues, but I can confirm that we're aware of the issues that have been raised nationally and in other states and will take appropriate action," Bruns wrote. According to the Wall Street Journal article a review of Securities and Exchange Commission records show that many of the largest California-based banks, such as Bank of America Corp., under the advice from accounting firm KPMG LLP, created registered investment companies in 1999 and 2000 to avoid paying state taxes and shifted more than $17 billion from their loan portfolios and other assets in to these investment funds and used the interest and other income the RICs generated to pay the parent company tax-free dividends. The practices were gradually shut down over the last two years (CU Times, Aug. 20). FCUL President/CEO Guy Hood applauded the FDOR's decision to review the issues raised in the Wall Street Journal story. "During a time period in which bankers have been constantly reminding everyone about the credit union tax exemption, it is extremely troubling that banks have been extremely creative in their efforts to avoid paying taxes. Credit unions find it troubling that bankers are furiously working to impose taxes on credit unions while they have been working just as furiously to avoid them." -

Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.

  • Critical CUTimes.com information including comprehensive product and service provider listings via the Marketplace Directory, CU Careers, resources from industry leaders, webcasts, and breaking news, analysis and more with our informative Newsletters.
  • Exclusive discounts on ALM and CU Times events.
  • Access to other award-winning ALM websites including Law.com and GlobeSt.com.

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.