The IRS Voluntary Disclosure Program for US persons who have not
properly reported their non-US bank and other financial accounts
and offshore structures, such as foreign trusts and companies
controlled by US persons ends on October 15, 2009.
In recent weeks, Democrat Senator Carl Levin has offered his Stop
Tax Haven Abuse Act as an amendment to the Senate Finance
Committee's healthcare bill, bringing the issue of tax haven abuse
back to the table just after the close of the IRS program, a move
that is supported by Barack Obama.
With current reports detailing thousands of individuals coming
forward to declare their offshore assets, there has been little
disclosure made by major corporations. While public corporations
are fairly transparent and often show up in examples of tax haven
abuse, privately held corporations are much more likely to hide
behind a veil of secrecy and employ complex off-shore structures in
order to avoid taxes.
Take the example of Koch Industries. This the largest privately
held conglomerate on the planet, employing approximately 70,000
people worldwide with annual revenues exceeding $100 billion.
Their financials are kept strictly confidential and they do not
disclose information about their management structure and
activities. Koch is known to be aggressive with their tax
avoidance strategies, having sued the IRS for $20 million in 2006
claiming that their tax refund was not correct. New investigations
have revealed that Koch operates a complex system of offshore
companies and accounts in order to avoid paying US taxes on huge
sums of corporate profits. Out of his Kansas office, Global Tax
Director for Koch Industries, Craig M. Munson, manages these
offshore corporations with the assistance of a shady Luxembourg
company, ATOZ s.a., whose partners are primarily former Arthur
Anderson staffers – the tax advisory giant that ceased to exist as
a result of their felony conviction in the Enron “off-shore and off-
balance sheet” debt scandal of 2002.
With the help of his offshore tax avoidance experts at ATOZ, Mr.
Munson has set up a network of companies under the brand name
“KoSa” that are used to move and consolidate funds offshore in
order to avoid taxes. Some of the companies include “KoSa Foreign
Investments” which was formed in June 2009 with over $1.8 billion
in capital and “KoSa Luxembourg” which in August of this year
declared a capital of over 520 million Euros. There are also
vehicle companies such as “KoSa US Receivables Company” which
declared a capital of nearly $185 million in August and “KoSa
Canada Receivables Company” with a capital of nearly $35 million.
These companies, and several others in the “KoSa” structures set up
by Mr. Munson and his ATOZ facilitators are shells with no
employees or physical operations. They are all incorporated under
the “s.a.r.l.” status which has light reporting and governance
requirements and is normally used for small businesses. When the
sums involved are significant, such as the case here, the use of an
“s.a.r.l.” is often cover for money laundering or tax avoidance
schemes. In this case, it appears that these companies exist for
no reason other than to avoid the payment of taxes. This is not the
first time that Mr. Munson’s Luxembourg companies are involved in
nefarious activity. In 2002, Arteva s.a.r.l., a Luxembourg
company doing business as “KoSa” with Mr. Munson named as manager,
was sued by the United States and plead guilty to charges of
criminal price fixing.