Corporate taxation is getting a lot of attention thanks to President Barack Obama's release of his plan to revamp how businesses pay taxes.
But the man he likely will face in the battle for the White House also is getting some unwanted spotlight because of a tax break used by a corporation upon whose board he served.
Republican presidential hopeful Mitt Romney has sat on the Marriott International board for 11 of the past 19 years, including six as chairman of the audit committee. During Romney's tenure, reports Bloomberg, the hotel giant repeatedly utilized complex tax-avoidance maneuvers and tangled at least twice with the Internal Revenue Service.
A key confrontation was over a tax shelter known as "Son of BOSS." According to the IRS, "Son of Boss was an abusive transaction aggressively marketed in the late 1990s and 2000 primarily to wealthy individuals." It was designed to create phony capital losses that then were used to offset capital gains.
The IRS reached a deal with many Son of BOSS participants in 2005, collecting $3.2 billion in taxes, interest and penalties from almost 200 taxpayers who participated in the settlement initiative.
As for Marriott, the Son of BOSS shelter reportedly helped one of the hotel's subsidiaries sell about $81 million of mortgage notes while simultaneously reporting a tax loss of roughly $71 million. The IRS challenged the Marriott move. The hotel sued.
Uncle Sam's position was affirmed by a 2009 federal appeals court ruling that invalidated the maneuver. The court sided with the Justice Department and called Marriott's transaction and attempted tax benefits "fictitious," "artificial," "spectral," an "illusion" and a "scheme."
Sounds like the appellate judges got a new thesaurus.
Romney's camp is not talking about his stint at Marriott and the tax techniques used then. Instead, his office is telling questioners that "for details of Marriott's tax planning, we refer you to Marriott."
But you can bet the questions will persist, coming from the other Republicans who want their party's nomination and then from the Obama campaign if Romney does get the GOP nod.
Do you think the questions about Marriott are fair? Does Romney's connection to the hotel and the illegal tax shelter it used at that time cause you any concern?
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