Tax Loophole - Bank of America: Bad for America

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With control of one in five credit cards and the maximum amount of bank deposits permitted by the Federal Reserve—there’s no question that the nation’s largest bank is also its most powerful one.

In fact, with 52 million customers, more than 5,700 bank branches, and more than 17,000 ATM machines across the country, Bank of America and its products reach nearly half of all U.S. households. Bank of America by the Numbers »

Although CEO Ken Lewis claims Bank of America is committed to “creating opportunities for people…to fulfill their dreams” a growing body of evidence shows the financial giant is using its size and its power to squeeze consumers, taxpayers, and working families.

In 2006, Bank of America raked in $21 billion in profits. Bank of America made more money from its U.S. operations than any other company—including ExxonMobil, the world's most profitable company.

Bank of America Exploited a Tax Loophole to Save Itself Millions in Taxes… While depriving states of tax revenue

In 2003, The Wall Street Journal revealed that Bank of America had transferred $8 billion dollars into a Nevada tax shelter in order to protect $750 million from taxes. The Bank did this by registering a subsidiary known as a regulated or registered investment company (RIC) with the Securities and Exchange Commission. Bank of America then shifted assets such as loan portfolios into the funds, and used the interest and other income produced to pay itself dividends exempt from state taxes. In his Wall Street Journal expose, Glenn R. Simpson wrote "In effect, the funds converted interest income from the banks' loan portfolios into tax-exempt dividends". RIC's were designed to help mutual funds avoid double taxation, not to help companies like Bank of America shelter taxable income. Bank of America's abuse of the RIC structure has been called "outrageous" by state officials who have seen their state's tax revenues suffer as a result.

Did Bank of America look the other way on a tax shelter scheme in order to keep the business of a couple of wealthy executives?»