During Romney's tenure as a Marriott director, the company repeatedly utilized complex tax-avoidance maneuvers, prompting at least two tangles with the Internal Revenue Service, records show. In 1994, while he headed the audit committee, Marriott used a tax shelter known to attorneys by its nickname: "Son of BOSS."
A federal appeals court invalidated the maneuver in a 2009 ruling, siding with the U.S. Department of Justice, which called Marriott's transaction and attempted tax benefits "fictitious," "artificial," "spectral," an "illusion" and a "scheme." Marriott had argued the plan predated government efforts to close such shelters.
Employing another strategy, Marriott legally avoided hundreds of millions of dollars in income taxes thanks to a federal tax-credit program criticized and allowed to expire by Congress. Marriott has also shifted profits to a Luxembourg shell company. During Romney's years on the board, Marriott's effective tax rate dipped as low as 6.8 percent, compared with the federal corporate statutory rate of 35 percent.
Oversight Role
Romney's business experience is the cornerstone of his presidential campaign. Opponents have focused on his leadership of the investment company Bain Capital LLC and his personal income tax rate of 13.9 percent. As a Marriott director, his responsibilities included oversight over the tax planning conducted by management, according to a company statement.
Romney's position as chairman of the board's audit committee for six years gave him and the other members responsibility to review financial reporting, according to Marriott's annual proxy filings. Members of that committee review "the results of internal and external audits, the accounting principles applied in financial reporting, and financial and operational controls," according to the company proxy filed covering his first year heading that committee."
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