The U.S. Internal Revenue Service is setting its sights on hedge funds.
The tax agency is pushing its New York-based staff to launch cases against hedge fund and other companies that have sought to skirt paying taxes with loans that originate in the U.S. but are approved offshore. The move is the latest by the IRS to cut down on alleged tax evasion by companies with offshore entities.
“We understand that foreign corporations and nonresident aliens may have used other strategies to originate loans in the United States, giving rise to effectively connected income,” Steven Musher, associate chief counsel for international at the IRS, wrote to New York field director Kathy Robbins. “We encourage you to develop these cases, and we stand ready to assist you in the legal analysis.”