Washington (Nov. 20, 2003) — Sen. Chuck Grassley, R-Iowa, chairman of the Committee on Finance, has asked the Transportation Department for copies of any documents it may have regarding an abusive scheme that allows major corporations to claim huge tax breaks using the nation's highways, subways, airports and water lines.  Grassley said he also plans to make the effective date of his legislation to shut down these shelters today instead of the date of enactment.

Under these schemes, municipalities are paid an up-front accommodation fee to lease their infrastructure to the tax shelter promoters. The cash received by the municipality, however, pales in comparison to the federal tax benefits received by the corporations, which are able to depreciate taxpayer-funded bridges, subways, and rail systems as a result of the lease. One municipal manager described these transactions as, "People giving him money which he never had to pay back, for doing something that he was already doing."

"Why do they think promoters would pay them such a handsome fee for doing nothing?"  Grassley said. "The shelter promoters are hiding behind the cities and are sending them to Capitol Hill to talk about what an important source of funding this is. This has nothing to do with a 'public-private' partnership. This is just good, old-fashioned tax fraud."

"We know this abuse is continuing. Last week, we learned that the Alamodome [an arena in San Antonio]  was leased under one of these deals. A few weeks ago, we heard that water lines in New Jersey were leased out for corporate deductions.  My legislation will stop this abuse.  Right now, it'll be effective on the date of enactment. However, when we get to the floor, I plan to offer an amendment that will shut down these transactions as of today."

— WebCPA staff

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