Loophole allowed Romney to use an LDS church exemption to defer taxes for 15 years
On October 30, 2012 At 7:53 am
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A report from Bloomberg News has reveled a loophole used by Republican Presidential nominee Mitt Romney to effectively “rent” the Church of Jesus Christ, Latter Day Saints (LDS) (Mormon) to defer paying taxes for a period of fifteen years.
Through the Freedom of Information Act (FOIA), Bloomberg obtained information that showed Romney set up a charitable remainder unitrust (CRUT) a year prior to Congress addressing the loophole in 1997.
The Raw Story reports that Jesse Drucker, from Bloomberg news, stated,
“In this instance, Romney used the tax-exempt status of a charity — the Mormon Church, according to a 2007 filing — to defer taxes for more than 15 years. At the same time he is benefitting, the trust will probably leave the church with less than what current law requires.”
The report also includes statements from Jonathan Blattmachr, an Estates lawyer, which further explains the benefits of a CRUT, which includes a provision that allows charities to avoid paying capital gains taxes on profits from the same of assets.
Blattmachr further explained that the trust provides for an upfront charitable deduction and yearly cash payments. He compared it to an IRA, which allows tax-deferred financial growth, along with an annuity.
TRS reports that Blattmachr told Bloomberg,
“The main benefit from a charitable remainder trust is the renting from your favorite charity of its exemption from taxation."
The report reveals the dollar amount that was available to the church decreased from about $750,000 (2001) to roughly $421,000 by the end of last year. Throughout the decade, Romney collected yearly cash payments.
TRS reports that Bloomberg received a response from the Romney that stated it had operated within the law.
Romney is worth approximately a quarter of a billion dollars, and has used several methods as the CEO of Bain Capital CEO to avoid paying taxes.