June 16 Senate Finance Committee Chairman Ron Wyden has asked the Obama administration why the United States failed to stop a tax-avoidance strategy used by hedge funds, including John Paulson's Paulson & Co, Bloomberg reported.
Wyden asked the U.S. Treasury Department and the Internal Revenue Service what they had done to challenge funds that channel investments through insurance companies in tax havens as a way to lower fund managers' personal income-tax bills, according to the report. (r.reuters.com/wyp22w)
"The department and the IRS have been aware of this loophole for over a decade," and "appear to have made no progress in ending this kind of tax abuse," Bloomberg quoted a June 12 letter by Wyden.
Reuters could not immediately verify the letter. Representatives for Paulson & Co could not be reached for comment outside regular U.S. business hours. (Reporting by Supriya Kurane in Bangalore; Editing by Gopakumar Warrier)