January 17,2002

Grassley: Enron News Underscores Need for Tax Shelter Legislation

WASHINGTON – Sen. Chuck Grassley, ranking member of the Committee on Finance, todaysaid revelations that Enron might have used tax-haven subsidiaries to avoid taxes and hide its financialdebts underscore the need for tax shelter legislation.

For several months, Grassley has been the lead Republican in a bipartisan effort to draftlegislation that would help the Internal Revenue Service identify tax shelters and police the illegal useof these vehicles. He and his colleagues have not yet introduced their bill.

Grassley said he is part of a Finance Committee effort to review whether Enron used certaintax vehicles that might have masked the company’s financial condition.

“It was a shock to read that Enron may have used nearly 900 tax-haven subsidiaries to avoidtaxes and hide its financial debts,” Grassley said. “We need to know more about Enron’s activitiesin these haven countries, but even with what we know right now, this is one more example of whyCongress should act on tax shelter legislation. This legislation would force disclosure of tax sheltersso that the IRS can better police them. We also need to fully assess the role that offshore tax havensmay play in facilitating tax shelters. I’m a tax cutter, but if there’s one thing I can’t stand, it’s a taxcheat. When one person or company fails to pay their share of taxes, it falls on everybody else to pickup the slack. So you can be sure that I’ll pursue this issue when Congress comes back in session.”

Grassley also is preparing legislation that would tighten up protections for retirement planparticipants in light of Enron’s collapse. He hopes to introduce a bill in the next few weeks.