In past entries on this blog, I have expressed concern about deploying the economic substance doctrine in criminal cases. Here is yet another reason for concern.
In American International Group v. United States (SDNY 1:09-cv-01871), in a civil tax case, the IRS has raised economic substance to defeat AIG's tax sheltering activities. (These activities appear to have the earmarks of bull…. tax shelters, but I suppose that is the issue in the case.) Keep in mind that this is a civil case and the scope and application of the economic substance doctrine apparently is uncertain (yet in criminal cases, it is supposed to set a known and knowable line to meet the willfulness element).
On November 4, 2013, Judge Louis L. Stanton (Wikipedia here) entered the following order (caption omitted):
View Jack Townsend's opinion in its entirety on the Federal Tax Crimes blog site.
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