Senators Ask For IRS Response To Enron Scandal

by Leroy Baker, Tax-News.com, New York

17 March 2003

The Chairman of the Senate Finance Committee Charles Grassley, last week requested to know what the IRS was doing to protect itself in the wake of revelations concerning Enron's massive tax evasion schemes.

In a letter written to acting IRS Commissioner Bob Wenzel, Grassley and the committee's ranking Democrat, Max Baucus, asked for the tax department's response to the Joint Tax Committee findings which revealed systematic, large scale and deliberate transactions designed to boost the firm's income figures and minimise tax losses.

When the report was published earlier in the year, Grassley described the revelations as "eye popping", announcing that they provided: "for the first time the complete story of Enron's efforts to manipulate its taxes and accounting. The report is very disturbing in its findings," he said at the time.

'In one 1997 transaction reportedly examined by (federal bankruptcy court examiner) Batson's staff, Enron transferred a lease on corporate jets and other assets into a special purpose entity. A complex series of loans and swaps of cash and stock produced big tax losses and deductions extending over several years. The deal was said to have netted Enron $66 million to add to its earnings between 1997 and 2001,' the Associated Press reported when the content was revealed.

Naturally, the powers that be are concerned with the sheer scale of the Enron affair, and would wish to avoid a similar type scandal occuring in the future. "We are interested in your views on JCT's (Joint Committee on Taxation) findings and recommendations as they pertain to the transactions involved and to those promoters and advisers who assisted Enron," the Senators wrote in their communiqué with the Internal Revenue Service.

Recommended