STATEMENT OF EILEEN J. O’CONNOR ON THE SIXTH CIRCUIT COURT OF APPEALS DECISION IN DOW CHEMICAL COMPANY V. UNITED STATES:

WASHINGTON, D.C. - “Today’s decision in Dow Chemical Company v. United States is a meaningful victory in the Justice Department’s effort to combat the abusive tax shelters that undermine the integrity of our nation’s tax laws.  The United States Court of Appeals for the Sixth Circuit recognized that the Corporate Owned Life Insurance (COLI) tax shelter Dow had used has no ‘practicable economic effect other than the creation of income tax losses.’  The court’s decision that Dow is not entitled to the $33 million in deductions it claimed in connection with the tax shelter vindicates the government’s position that a company’s federal tax liability is not reduced by transactions that have no economic consequence aside from the attempted tax savings.”

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06-035