Bain Capital LLC is one of 12 private equity firms in the United States to be subpoenaed by the state attorney general of New York. The subpoena stems from an investigation into the use of a tax strategy by the firms that helped save them millions of dollars. Bain was once led by Republican presidential nominee Mitt Romney.
The subpoena was issued in July and it has asked for documents that show the conversion of the fees that the firms charge for managing assets into fund investments for clients. The practice is referred to as ‘management fee waiver.’ If the firms use them as fund investments, the tax on the income would be 15 percent. When the conversion is not used, the tax on the income is 35 percent.
the Taxpayer Protection Bureau of the New York Attorney General is operating the tax investigation. According to the website of the Attorney General, the bureau was created in 2011 “to root out fraud and return money illegally stolen from New York taxpayers at no additional cost to the state.”
The office of the Attorney General filed a lawsuit against Sprint Nextel Corp for over $300 million. The lawsuit claimed that the company committed tax fraud by not collecting or paying millions of taxes for their cell phone services.
