U.S. court bars promotion of stock sale tax scheme
WASHINGTON (Reuters) - A federal judge has barred the promotion of a scheme designed to help clients evade taxes on more than $1.25 billion in asset sales, the U.S. government said on Tuesday.
The U.S. District Court for the Northern District of California issued an injunction on Monday to stop Charles Cathcart from promoting the "90 percent loan scheme" that helped customers avoid tax on sales of stock and other securities.
The tax dodge developed by Cathcart, an economist, purported to let clients get loans in exchange for their securities. The loans were allegedly made through sham companies in low and no tax jurisdictions, including the Isle of Man, Hong Kong and Ireland, the government said.
Cathcart "retains the right to appeal the court's decision that the product was a sale and not a loan," Cathcart's attorney Steve Soulios said.
Governments around the world, including the United States, have been cracking down on wealthy individuals who stash funds offshore to evade taxes.
The scheme cost the U.S. Treasury at least $230 million and enriched Cathcart and several associates by more than $100 million through 3,100 transactions, the government said.
Taxpayers in the United States must report and pay taxes on capital gains from the sale of assets.
(Reporting by Kim Dixon; editing by Tim Dobbyn and Andre Grenon)
