Denver, CO, 06/11/2014 (Stocksntrade) – The United States Supreme Court has now declined to hear the appeal from Wells Fargo & Co (NYSE:WFC) in the case that involves a very complicated financial deal that had been implemented via the banking group which the government said had been set up only in order to avoid taxes amounting to millions of dollars. The order of the high court’s will now let stand the appeals court ruling from 2013 which said the WFC deal, that had generated in excess of $400M in tax loses, was for any business purpose or any kind of “economic substance” that was beyond tax avoidance.
The Financial Impact
A spokesperson for the company, said in a statement that this decision would not have any kind of financial impact on the company as this case involved an $82M tax refund, and not any liability. Wells Fargo & Co (NYSE:WFC)had also argued that the government has been enforcing the tax law in a very broad manner & that the SF-based bank had structured the transaction properly as some legitimate tax planning. Now, the Supreme Court might face that economic substance question very soon as the United States Internal Revenue Service also has numerous similar disputes that are in litigation with some major banks.
Number Of Pending Cases
BNY Mellon Corp , Santander Holdings & and BB&T Corp all have individual economic substance cases that are also pending with the IRS at the federal appeals courts and involve multi-million-dollar tax saving deals called STARS- structured trust advantaged repackaged-securities. This “economic substance” doctrine is actually a legal strategy which focuses very little on technicalities of any particular financial structures & more on the broader purposes & outcomes. The IRS is also relying much more frequently on the economic substance arguments to win the corporate & individual tax shelter cases, said a tax lawyer who formerly at the US Justice Department, Stuart Bassin.