A billionaire Warren Buffett is suing the Internal Revenue Service for allegedly using a $3.5 billion tax loophole to avoid paying more than $1 billion in income taxes, according to court documents obtained by The Huffington News.
In the latest twist in Buffett’s ongoing tax saga, Buffett is seeking $20 million from the IRS to resolve the claim, according the documents filed in federal court in Manhattan on Thursday.
Buffett, whose Berkshire Hathaway Inc. has been hit by a string of recent earnings declines, has been under intense scrutiny over the last two years for using a tax loophole called the “warren” to avoid federal income taxes.
That loophole allows wealthy individuals and corporations to defer federal income tax on some of their assets and invest it overseas.
While Buffett has been criticized for using the loophole, his tax lawyers have insisted that the use of the tax shelter was a legitimate business strategy and that Buffett has not been dodging taxes.
The Buffett lawsuit is the latest chapter in a messy saga that began when Warren Buffett, billionaire investor and co-founder of Berkshire Hathway Inc., claimed in 2014 that he had used a tax shelter to avoid $1.4 billion in federal income and corporate taxes.
According to the filing, Buffett’s attorneys argue that the IRS improperly made a $4.6 billion tax refund claim to the Internal Service in 2015.
The refund claim was made to avoid tax on the tax value of the funds that Buffett’s tax attorneys had held, the filing said.
“While we appreciate Mr. Buffett’s efforts to reduce his federal income income tax burden, and are disappointed that he has not complied with all the procedural steps required to claim a refund, we believe that his tax refund has been incorrectly claimed, and that his refund claim should be reversed,” the filing stated.
Buffetts attorneys declined to comment.
In 2016, Buffett and his attorneys asked the IRS for a $5.6 million refund to cover the tax loss and the legal fees, according documents filed by Berkshire Hathaw in 2016.
Buffett and Berkshire Hathay were later awarded $5 million by the IRS.
Buffets attorneys in that case also pointed to a series of recent tax rulings that found the Buffett loophole was valid.
They argued that Warren Buffett should have been able to claim his tax refunds based on a tax deduction for the warren, according a court filing from 2015.
In a ruling last month, a judge said the Warren Buffett tax dodge “would likely have been recognized by the court” had he not used the loophole.
The IRS has repeatedly said it has never made a decision about the Warren Buffetts tax avoidance claims, and has not provided a copy of its ruling.