In Brief: Court Denies Riggs Credit for Brazil Loans

Bloomberg News

WASHINGTON — The U.S. Tax Court has ruled against Riggs National Corp. and 300 other major banking companies that sought tax breaks for loans to the Brazilian government in the 1980s.

The Tax Court, whose 1996 ruling against Riggs was overturned in January 1999 by a federal appeals court, this time denied Riggs foreign tax credits because it said the company could not prove it made foreign tax payments arising from the multibillion dollar bailout of the Brazilian central bank.

Riggs, the largest banking company based in Washington, “failed to establish that the withholding taxes in issue were paid by the central bank on” its behalf, the Tax Court said in a decision released Monday. The court said the banking companies and the Brazilian government worked to create “the appearance of the fictitious payment of taxes” that the companies were not required to pay.

Joe Cahill, Riggs’ general counsel, called the ruling unprecedented. “The fact is there is no court in the United States that has ever denied a foreign tax credit where the taxpayer like Riggs has authenticated copies of original tax receipts,” he said.