11/15/2005 - Posted by:
The Langston Law Firm, P.A.
Phone: 662-728-3138
Fax: 662-728-1992
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Tax Fraud; Publicly-traded company evaded state income tax by means of a complicated tax shelter; $125 Million Settlement
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I recently represented the State of Mississippi as outside counsel in the prosecution of a civil lawsuit against MCI Inc. for tax fraud. The predecessor corporation of MCI (WorldCom Inc.), with the assistance of KPMG LLP (an international accounting firm), developed a tax shelter in which WorldCom's subsidiary companies made payments to their corporate parent in exchange for the parent company's "management foresight." The State alleged that these payments were mischaracterized as "royalties" in order to avoid state tax in Mississippi from 1999 through the middle portion of 2002. We recently settled this suit for $125 million.
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