August 05, 2014
Tim Larson, Partner-In-Charge of Tax & Business Services New York, Featured in The Wall Street Journal Article, "Treasury's Inversion Plan Highlights Mixed Congressional Track Record."
By Emily Chasan
Can the Treasury Department stop the flow of corporations fleeing U.S. taxes faster than Congress?
On Tuesday, WSJ's Damian Paletta reported the Obama administration is considering ways to deter American firms from reincorporating overseas by acquiring foreign firms.
Over the past decades, Congress has tried to halt this process, known as "inversions," but with a slow and mixed track record.
"The knee jerk reaction is to stop the bleeding," said Timothy Larson, a tax partner at accounting firm Marcum LLP in New York.
The trend first sparked Congressional ire in the 1990s. In the earlier wave of inversions, public companies restructured internally to form a parent corporation in a lower-tax jurisdiction, such as Bermuda. A handful of bills aimed at stopping inversions were introduced in 2002 and 2003, including the Corporate Patriot Enforcement Act of 2002 and the Uncle Sam Wants You Act of 2002.
But it took until 2004 to stop that wave with the American Jobs Creation Act of 2004, which added a rule to the Internal Revenue Code, known as section 7874 that curbed the tax benefits.