WASHINGTON Feb 27 The U.S. Justice Department
said on Wednesday it has won a $1 billion tax shelter case
against Dow Chemical Co that involved a Swiss
partnership, Wall Street financial giant Goldman Sachs
and international law firm King & Spalding.
The U.S. District Court for the Middle District of Louisiana
"rejected two tax shelter transactions entered into by The Dow
Chemical Company that purported to create approximately $1
billion in phony tax deductions," Justice said in a statement.
Chief Judge Brian Jackson also imposed penalties, the
department said of the decision in the Baton Rouge court.
A Dow spokeswoman said in a statement that Dow sued the U.S.
government for return of taxes paid for tax years 1993-2003.
"Dow paid all taxes at issue plus interest, but requested
the U.S. District Court to agree that the taxes were wrongly
assessed by the IRS," the spokeswoman said.
"Dow is disappointed by the trial court's decision ... we
believe the opinion is not supported by the facts and applicable
law. Dow is exploring all of its options, including appeal."
The Justice Department said the tax transactions were
created by Goldman Sachs and King & Spalding and involved
forming a partnership that Dow operated from its European
headquarters in Switzerland.
Jackson wrote in his 74-page opinion that the government was
correct to reject "the artificial tax benefits created by these
schemes that were designed to exploit perceived weaknesses in
the tax code and not designed for legitimate business reasons,"
according to the Justice Department.
Assistant U.S. Attorney General Kathryn Keneally of
Justice's Tax Division said: "It is offensive to all taxpayers
who pay their fair share when our largest corporations believe
that they can claim hundreds of millions of dollars in tax
deductions that are manufactured by abusive tax schemes."
Goldman Sachs could not immediately be reached for comment.
A King Spalding spokesman declined to comment.