Enron came under pressure to release tax returns and other details about its tax planning | Norton Rose Fulbright
ENRON came under pressure to release tax returns and other details about its tax planning.
The Senate Finance Committee asked the company in late January to let it release information pulled from the company’s tax returns. The committee already has authority to review the information, but not to make it public.
“It was a shock to read that Enron may have used nearly 900 tax-haven subsidiaries to avoid taxes and hide its financial debts,” Senator Charles Grassley (R.-Iowa) said. Grassley is the top Republican on the committee. Congressman Charles Rangel (D.-New York), the ranking Democrat on the tax-writing committee in the House, called for legislation to deny interest deductions on debt instruments that a corporation records as equity on its books.
Meanwhile, the Senate Finance Committee announced plans to launch an investigation into Enron’s corporate tax structure and its use of tax products to shelter income, but seemed in no rush to set a date for hearings. The committee staff appears to be proceeding with caution. A lot of Enron tax planning is no different than that used by many other US multinationals.
The Enron situation has complicated the outlook this year for tax legislation. The Senate is scheduled to start debating the Bush energy plan — including tax incentives for some new power plant construction — in February, but the schedule could slip if members of Congress feel they need to understand better what went wrong with Enron before committing to a new energy policy. At the same time, there may be pressure to revisit some Clinton era tax proposals to crack down on hybrid debt and other sources of book and tax disparity.