Bank of New York hit with $850 million tax court decision for cross border tax deal

A federal tax court judge yesterday rules that the Bank of New York improperly claimed foreign tax credits through a deal arranged by Barclays and was ordered to pay $850 million in back taxes. The decision opens the door for similar cases against other banks which could mean billions of dollars in back taxes owed by those banks. The deals are called Stars, short for Structured Trust Advantage Repackaged Securities and are cross border deals which take advantage of different nations’ tax rates and rules allowing American financial firms to minimize their total tax payments. ┬áThe Tax Court judge ruled that the Stars deals have no economic benefit other than lowering taxes. Jeffrey Newman represents whistleblowers.