Post by paoktzi on Nov 8, 2010 7:08:38 GMT 10
Give Lowy no help, Tax Office warned US
Leonie Wood
November 8, 2010
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Peter Lowy before a Senate subcommittee in Washington in 2008. Photo: Yuri Gripas
AUSTRALIAN tax authorities have warned their US counterparts not to give Peter Lowy, the US-based son of billionaire Frank Lowy, documents arising from a cross-border investigation into his tax affairs, arguing the move could seriously damage relations between the two countries.
The cautionary advice was issued in late September in a letter from the Australian Tax Office to the US Internal Revenue Service.
The IRS has relied on the ATO letter in submissions made in a US courtroom dispute as the US tax investigations and collections agency argues it should not be forced to release sensitive material to Mr Lowy, who is a joint managing director of Westfield Group.
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Court documents filed in recent weeks in the US District Court of Northern California also indicate that since May 2007 there has been an extensive exchange of information between the ATO and the IRS focusing on Mr Lowy and his financial affairs.
The collaboration between the agencies appears to have intensified after September 2007, and continued well into 2008.
In July 2008, a US Senate committee, which was examining the use of tax havens by US citizens, accused the Lowys of using a Liechtenstein bank and a sophisticated trust structure to hide $US68 million from tax authorities.
In a statement issued at the time the Lowys denied wrongdoing and said they had been co-operating with the investigations.
But a few months after the high-profile Senate committee hearings, Mr Lowy, his wife Janine and their Delaware-registered company, Beverly Park Corporation, filed freedom-of-information requests with the IRS seeking documents arising from the investigation.
Mr Lowy is suing the IRS after being denied access to more than half of the estimated 12,700 pages of material uncovered during the FOI search.
One plank of Mr Lowy's request focused on any material involving communications between the IRS and the US Senate committee about his financial affairs. But a few weeks ago the IRS told the court that its FOI searches had not uncovered any communications about the Lowys or Beverley Park Corp that may have been passed between the IRS and the Senate committee.
The IRS has located 12,761 pages of material, but it refuses to hand over 6869 pages; of this, 6648 pages relate to information given to the US by Australian authorities under a bilateral tax treaty.
Douglas O'Donnell, a director in charge of international co-ordination in the IRS's large business and international division, told the court he believed any further release of documents to the Lowys would ''seriously impair federal tax administration'' and ''chill'' its existing co-operative arrangements with Australian and British tax agencies.
Mr O'Donnell said the ATO recently wrote to the IRS stressing the Australian agency's expectation that any material arising from the Australian-US exchanges of information be kept secret.
''In this regard, in a letter to the [IRS] dated September 23, 2010, the Australian tax authorities specifically reaffirmed their expectation - expressed previously to members of my staff - that communications between the IRS and the Australian tax authorities pursuant to the tax convention are privileged and further stated that the release of such material to the plaintiffs would adversely affect relations between the United States and Australia,'' Mr O'Donnell said.
Mr O'Donnell noted the IRS received a similar caution from British tax authorities on September 27, warning that US-Britain arrangements might also be put at risk.
The court documents include references to extensive correspondence between the ATO and the IRS about the Lowys. It appears the ATO wrote to the IRS at least 26 times between May 2007 and September 2008 specifically on matters related to the Lowy investigation. Mr O'Donnell argued that the US viewed its tax treaties as a ''critical element of federal tax administration'' because they helped obtain information vital to US authorities in criminal and civil tax cases.
''Based on my experience, I believe that failure to honour expectations of confidentiality and secrecy expressed by both Australia and the United Kingdom would disrupt each government's confidence in the exchange of information process and would chill future co-operation by these tax treaty partners,'' Mr O'Donnell said.
He said if the US was unable to honour the secrecy provisions, Australian and British authorities would be less likely to co-operate with requests for information and ''interfering with the administration of US civil and criminal tax investigations''.
''In summary, if I fail to maintain the confidentiality of this information, it would harm working relations with Australia and the United Kingdom as tax treaty partners,'' Mr O'Donnell told the court.
Beyond the concerns about the bilateral arrangements, the IRS is withholding other pages from the Lowys on the basis that releasing them could give the Lowys advance warning about ''the nature, direction and scope of the ongoing civil tax examination [investigation] and the strategies and theories that may be utilised by the government …''
The IRS last month asked the US court for summary judgment against Mr Lowy in the FOI action, but the court last week granted the businessman permission to file a further legal submission.
Leonie Wood
November 8, 2010
Ads by Google
Tax Depreciation Schedulewww.AustTaxOnline.com.au
Maximise Tax Depreciation Potential ATO Compliant Reports. Contact Us.
Peter Lowy before a Senate subcommittee in Washington in 2008. Photo: Yuri Gripas
AUSTRALIAN tax authorities have warned their US counterparts not to give Peter Lowy, the US-based son of billionaire Frank Lowy, documents arising from a cross-border investigation into his tax affairs, arguing the move could seriously damage relations between the two countries.
The cautionary advice was issued in late September in a letter from the Australian Tax Office to the US Internal Revenue Service.
The IRS has relied on the ATO letter in submissions made in a US courtroom dispute as the US tax investigations and collections agency argues it should not be forced to release sensitive material to Mr Lowy, who is a joint managing director of Westfield Group.
Advertisement: Story continues below
Court documents filed in recent weeks in the US District Court of Northern California also indicate that since May 2007 there has been an extensive exchange of information between the ATO and the IRS focusing on Mr Lowy and his financial affairs.
The collaboration between the agencies appears to have intensified after September 2007, and continued well into 2008.
In July 2008, a US Senate committee, which was examining the use of tax havens by US citizens, accused the Lowys of using a Liechtenstein bank and a sophisticated trust structure to hide $US68 million from tax authorities.
In a statement issued at the time the Lowys denied wrongdoing and said they had been co-operating with the investigations.
But a few months after the high-profile Senate committee hearings, Mr Lowy, his wife Janine and their Delaware-registered company, Beverly Park Corporation, filed freedom-of-information requests with the IRS seeking documents arising from the investigation.
Mr Lowy is suing the IRS after being denied access to more than half of the estimated 12,700 pages of material uncovered during the FOI search.
One plank of Mr Lowy's request focused on any material involving communications between the IRS and the US Senate committee about his financial affairs. But a few weeks ago the IRS told the court that its FOI searches had not uncovered any communications about the Lowys or Beverley Park Corp that may have been passed between the IRS and the Senate committee.
The IRS has located 12,761 pages of material, but it refuses to hand over 6869 pages; of this, 6648 pages relate to information given to the US by Australian authorities under a bilateral tax treaty.
Douglas O'Donnell, a director in charge of international co-ordination in the IRS's large business and international division, told the court he believed any further release of documents to the Lowys would ''seriously impair federal tax administration'' and ''chill'' its existing co-operative arrangements with Australian and British tax agencies.
Mr O'Donnell said the ATO recently wrote to the IRS stressing the Australian agency's expectation that any material arising from the Australian-US exchanges of information be kept secret.
''In this regard, in a letter to the [IRS] dated September 23, 2010, the Australian tax authorities specifically reaffirmed their expectation - expressed previously to members of my staff - that communications between the IRS and the Australian tax authorities pursuant to the tax convention are privileged and further stated that the release of such material to the plaintiffs would adversely affect relations between the United States and Australia,'' Mr O'Donnell said.
Mr O'Donnell noted the IRS received a similar caution from British tax authorities on September 27, warning that US-Britain arrangements might also be put at risk.
The court documents include references to extensive correspondence between the ATO and the IRS about the Lowys. It appears the ATO wrote to the IRS at least 26 times between May 2007 and September 2008 specifically on matters related to the Lowy investigation. Mr O'Donnell argued that the US viewed its tax treaties as a ''critical element of federal tax administration'' because they helped obtain information vital to US authorities in criminal and civil tax cases.
''Based on my experience, I believe that failure to honour expectations of confidentiality and secrecy expressed by both Australia and the United Kingdom would disrupt each government's confidence in the exchange of information process and would chill future co-operation by these tax treaty partners,'' Mr O'Donnell said.
He said if the US was unable to honour the secrecy provisions, Australian and British authorities would be less likely to co-operate with requests for information and ''interfering with the administration of US civil and criminal tax investigations''.
''In summary, if I fail to maintain the confidentiality of this information, it would harm working relations with Australia and the United Kingdom as tax treaty partners,'' Mr O'Donnell told the court.
Beyond the concerns about the bilateral arrangements, the IRS is withholding other pages from the Lowys on the basis that releasing them could give the Lowys advance warning about ''the nature, direction and scope of the ongoing civil tax examination [investigation] and the strategies and theories that may be utilised by the government …''
The IRS last month asked the US court for summary judgment against Mr Lowy in the FOI action, but the court last week granted the businessman permission to file a further legal submission.
