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Federal Contractor Misconduct Database (FCMD)

The federal government routinely awards contracts to companies with histories of misconduct, including contract fraud and other violations. POGO believes that providing this website will help to improve contracting decisions and increase public knowledge of how the government spends billions of taxpayer dollars each year. Read more…

Castle Harbour Tax Shelter

The U.S. Internal Revenue Service alleged that TIFD III-E, Inc., a subsidiary of General Electric Capital Corporation, entered into a tax avoidance scheme through which it substantially underreported its income taxes in the 1990s. In 1993, TIFD formed a partnership named Castle Harbour LLC with two Dutch banks, under which it held a fleet of leased commercial aircraft. Under the provisions of the partnership agreement, TIFD received most of the actual leasing income, but 98 percent of the taxable income was allocated to the banks, which were not subject to U.S. income taxes. In 2001, the IRS determined that TIFD owed $62.2 million in taxes. TIFD paid the amount and sued in federal court for a refund. In January 2012, the appellate court, for the second time, ruled in favor of the government and upheld the assessment.

Misconduct Type
Tax
Enforcement Agency
Treasury – IRS
Contracting Party
None
Court Type
N/A
Disposition
Restitution
Date of Second Appellate Court Decision
1/24/2012
Contractors Involved Penalty
Total
General Electric $62,200,000
Further Information Released
DOJ Press Release 2/29/2012

Federal Contractor Misconduct Database