AIG settles lawsuit for more than $400 million
November 4, 2020 by Lyle Adriano
American International Group (AIG) has settled a tax shelter lawsuit, related to seven cross-border transactions made during the mid-1990s – transactions designed to generate bogus foreign tax credits, a US attorney said.
According to the acting US attorney for the Southern District of New York, AIG has agreed to pay a 10% penalty and disallow more than $400 million in foreign tax credits.
The settlement ends a US investigation into the tax shelters; prosecutors said those shelters allowed AIG to create phony foreign tax credits and reduce its taxes in the US. In 2009, AIG filed a suit seeking a refund based on claimed credits for 1997. But the federal government determined that the transactions “lacked any meaningful economic substance” or legitimate business purpose.