A little extra detective work

Monday's Irish Times provides an update on one aspect of a story that's been bouncing around for a while: the role of Ireland in facilitating big tax avoidance by US companies or individuals. One problem is that the financial dealings occasionally cross the line into tax evasion, and then the Internal Revenue Service gets interested. Hence, in continuing litigation related to the same tax shelter that drew in former Ambassador to Ireland, Richard Egan, there is the case of Keith and Laura Bynum Tucker:

The US attorney's office in southern Manhattan has indicted two senior accountants and a lawyer attached to KPMG for setting up bogus currency trades through Sligo (2000) Co Inc, which allegedly ran a tax "sham" through a Dublin-based company called Epsolon Ltd.

One Dallas financier and his wife put $39 million into the scheme. The couple claimed they did not have to pay US taxes on an Irish company but then allegedly reimported the money to the US just six days later, claiming a net loss for tax purposes.

They are also alleged to have converted their Irish company, Epsolon, to an American partnership in the same week.

According to records in the Companies Office in Dublin, Epsolon was incorporated on November 6th, 2000, but was dissolved on October 29th, 2004. Two directors are listed: Franklin Montgomery of 25 West 54th Street in New York and Keith Tucker of Turtle Creek Boulevard in Dallas, Texas. The registered office in Dublin was 2 Argyle Square, Morehampton Road, Donnybrook.

The Irish Times has been shown e-mails from one lawyer indicted in the scheme in which he allegedly tried to have the Irish shelter approved by his law firm without properly assessing whether it was legal.

The .. IRS ... now claims that the couple who benefited from the scheme, Mr Tucker, a Dallas-based financier, and his wife, Laura Bynum Tucker, owe $21.7 million in unpaid tax and penalties for involvement in the scheme.

This is part of a complex set of lawsuits in which the IRS went after participants in various KPMG tax shelters for back taxes, and the participants in turn sued KPMG for bad tax advice, and the government in turn went after KPMG for promoting abusive tax shelters.

One additional thing that the Irish Times could have done -- the mention of rich Texans dodging taxes means that a connection to George W. Bush can't be very far away, and sure enough it's not. It did take a bit of Googling to figure out that the Tuckers actually live in Missouri for political donation purposes, but there she is on the invaluable Fundrace site:

MRS. LAURA BYNUM TUCKER
HOMEMAKER
George W. Bush
$2,000

And that's only the donations that Fundrace tracks. A Kansas City, Missouri business newspaper had last year picked up the strange aspects of the transactions with the Irish companies:

In a 2004 petition filed against the IRS ruling in U.S. Tax Court, the couple stated that their investment company, Sligo (2000) Co. Inc., lost nearly $40 million because of an Irish subsidiary, Epsolon Ltd., that dealt in foreign currency exchanges.

Epsolon bought $156 million of multiple foreign currency options from Lehman Bros. N.A. on Dec. 21, 2000, then sold them back to Lehman on the same day, realizing a $51.26 million gain.

A 33% capital gain in one day? Now that's some quality day-trading!