Bloomberg reports that JP Morgan has asked more than 2,000 current and former employees to contribute out of their own pockets to a settlement with the UK over the firm’s use of an offshore trust for bonus payments.
While the Bloomberg article states JPM is asking employees to help fund the settlement, Mr. Dimon’s offer seems more like extortion:
People who used JPMorgan’s trust told the FT they were asked to participate in a so-called blind auction, in which they would volunteer to pay a tax rate of their choosing. If the auction fails to generate enough money to fund the settlement, people who submitted less than the average bid would be excluded from the deal and face a 52 percent tax rate when the trust’s assets are liquidated, the newspaper said.
JPMorgan Chase & Co. (JPM) asked more than 2,000 current and former employees to contribute to a settlement with the U.K.’s tax authority over their use of an offshore trust for bonus payments, according to a person briefed on the situation.
Employees who participated in the trust were asked to help fund a payment of at least a few hundred million pounds if they want to settle with Her Majesty’s Revenue and Customs, the U.K. tax authority, the person said, asking not to be named because the talks are private. The bank and workers may pay about 500 million pounds ($802 million) total, the Financial Times reported yesterday, without saying where it got the information.
Corporations including Starbucks Corp. (SBUX), Amazon.com Inc. and Google Inc. have come under attack from British lawmakers and protesters for using complex accounting methods to minimize tax liabilities in the U.K. The government will invest in the part of the tax office that targets multinational companies, Chancellor George Osborne said last week.
The case involving JPMorgan focuses on a Jersey-based trust established 20 years ago, according to the FT. Such entities, typically holding bonus payments that can’t be repatriated without triggering tax payments, are being closed after they were targeted in legislation last year, the FT said.
“Our employee trust has always been transparent to HMRC, and its independent trustee has consistently paid taxes in accordance with U.K. tax law,” JPMorgan said in an e-mailed statement….