AIG Sues the Government?!?

Postby Marinepits » March 21st, 2009, 12:37 pm

WTF!!! This money HAS to go directly to paying back their BS bailout! >( ... 03089.html

AIG Suing To Recover Taxes in IRS Dispute
Firm Says It Has Duty To Press On

By David S. Hilzenrath
Washington Post Staff Writer
Saturday, March 21, 2009; Page D01

As AIG takes billions of dollars from the federal government to stay afloat, it is suing the government for millions more.

The big insurer is trying to recover $306.1 million of taxes, interest and penalties from the Internal Revenue Service. Among other things, AIG is contesting an IRS determination last year that the company improperly claimed $61.9 million of tax credits associated with complex international transactions.

AIG has also asked a court to make the government reimburse it for money spent suing the government.

Given that the government owns 79.9 percent of AIG and has been using taxpayer money to fill a seemingly bottomless hole at the company, the lawsuit might seem like a case of biting the hand that feeds it. But an AIG spokesman said the company has an obligation to press its case.

AIG believes it overpaid the IRS, and it "has a duty to its shareholders, including the government and other shareholders, to insure that it pays the proper amount of taxes," spokesman Mark Herr said by e-mail.

Washington tax lawyer Martin Lobel agreed with that assessment.

"If in fact they honestly believe that they're entitled to a refund of those taxes, it would be a breach of their fiduciary duty not to" sue, Lobel said.

"On the other hand, the sense of entitlement from AIG is awesome," Lobel said.

Because the dispute pits the government against a company that has essentially become a ward of the government, the only clear winners are likely to be lawyers, legal experts said. The legal expenses could consume millions of dollars, they said.

"You're dealing with yourself, and you're paying a lawyer to do it. It seems kind of bizarre," said an international tax lawyer who spoke on condition of anonymity because he was not authorized to comment publicly.

Lawyers at the firm Sutherland Asbill Brennan, which is representing AIG, did not respond to an interview request.

The lawsuit was reported previously by the Wall Street Journal.

For partners of similar stature to those representing AIG, fees can run from $700 to $900 per hour, said Dan Binstock, managing director of BCG Attorney Search, a legal recruiter.

AIG's dispute with the IRS focuses on taxes for 1997 and dates at least as far back as March 2008, when the IRS sent AIG a bill for taxes it said the company should have paid. Without conceding, AIG last summer paid the bill. Several weeks later, the government threw the failing company an $85 billion lifeline. Since then, the federal bailout of AIG has soared to more than $170 billion.

The lawsuit spotlights AIG's use of intricate cross-border deals engineered to raise money for the company while minimizing taxes. The deals typically involved foreign banks and AIG subsidiaries incorporated in the Cayman Islands.

The transactions, of a general type commonly used by multinational corporations, took advantage of the notion that the U.S. government and foreign governments would look at the same deal differently, generating benefits on both ends and allowing the parties to translate those benefits into lower borrowing costs for AIG, the international tax lawyer said.

Though the deals defy simple explanation, AIG's lawsuit conveys a sense of them, noting for example that, in one transaction, the Bank of Ireland "acquired nominal legal title" to shares of an AIG subsidiary called Maitengrove Finance while another AIG subsidiary "retained equitable title and beneficial ownership" of the shares "for federal income tax purposes."

The deals involved AIG Financial Products, the subsidiary whose financial alchemy brought AIG to the brink of collapse.

In the lawsuit, AIG is also seeking to recoup taxes it claims it overpaid as a result of having overstated its taxable income. The company, which was shaken by an accounting scandal years ago, later corrected past financial statements.

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Postby cheekymunkee » March 21st, 2009, 3:39 pm

unfucking real. They have us by the balls & they KNOW it.
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Postby madremissy » March 21st, 2009, 8:34 pm

:nono: This whole thing p*sses me off beyond belief.
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Postby DemoDick » March 21st, 2009, 8:42 pm

cheekymunkee wrote:unfucking real. They have us by the balls & they KNOW it.

Who? AIG or the Fed? I think both.

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