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Cox helped US to investigate tax evasion claims against tycoon

Bermuda is at the centre of an investigation into the finances of Australian tycoons the Lowy family in a bid to uncover who was behind a Liechtenstein-based foundation that US authorities have alleged was used for tax evasion.

That is according to a report in the Sydney Morning Herald yesterday which revealed that the US Internal Revenue Service (IRS) approached Bermuda Government in April 2009 for help in determining the ownership of Adelphi Ltd and Clareville Ltd, which the IRS believed was controlled by the Lowys.

The report said that the IRS was looking into Peter and Janine Lowy’s tax returns for the year to December 2005, as well as the 2004-05 tax return of Beverly Park Corporation, a Delaware-registered company owned by the Frank Lowy Family Trust, and certain parts of the company’s returns between 1997 and 2007.

After receiving the IRS request, Premier Paula Cox in her capacity as Finance Minister was said to have sent a formal demand to the local offices of Ernst & Young seeking financial statements, e-mails, notes, correspondence, billing statements and contact details.

The report said that the IRS told Bermuda that its findings indicated that “worldwide income may have been received by the taxpayers (the Lowrys and Beverly Park) which could have been taxed by the United States”.

In its request, the IRS was reported to have said that Adelphi’s ownership and control during the ten years to 2007 was relevant to that of the Luperla Foundation and that understanding Luperla’s ownership would help to resolve whether the Lowys should have filed information about the Liechtenstein foundation with US tax authorities.

The IRS told Bermuda that it was seeking information about where Adelphi had obtained its funds, whether it transferred all its assets to Luperla, when it was dissolved and “whether Peter and/or Janine Lowy directly or indirectly exercised control of Adelphi Ltd”, said the paper.

Details of the Bermuda enquiries emerged in the US District Court in northern California, where Mr Lowy is suing the IRS under the Freedom of Information Act where he is seeking to get them to hand over thousands of pages of documents related to his US tax investigation.

The IRS has maintained that the documents remain confidential as a product of exchanges between the US tax authorities and the Australian Taxation Office under a tax treaty, the report stated.

Mr Lowy’s lawyers claim that while the IRS’s Bermuda request had led to some material being handed over to US authorities, the IRS had not “identified the existence of such records or identified any grounds for withholding such records”, according to the report.

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Published August 18, 2011 at 2:00 am (Updated August 18, 2011 at 9:37 am)

Cox helped US to investigate tax evasion claims against tycoon

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