A.I.G. is suing the government to recover over $300 million in tax breaks that the insurance company says were improperly denied. What sort of tax breaks? The sort otherwise known as illegal Cayman Island tax shelters.

The lawsuit contends in part that the federal government owes A.I.G. nearly $62 million in foreign tax credits related to eight foreign entities, with names like Lumagrove, Laperouse and Foppingadreef, that were set up or controlled by financial products, often through a unit known as Pinestead Holdings.

United States tax law allows American companies to claim a credit for any taxes paid to a foreign government. But the I.R.S. denied A.I.G.’s refund claims in 2008, saying that it had improperly calculated the credits. The I.R.S. has identified so-called foreign tax-credit generators as an area of abuse that it is increasingly monitoring.

The remainder of A.I.G.’s claim, for $244 million, concerns net operating loss carry-backs, capital loss carry-backs, a general refund claim and claims for refunds of other tax-related payments that A.I.G. says it made to the I.R.S. but are now owed back. The claim also covers $119 million in penalties and interest that A.I.G. says it is due back from the government.

So, to review: A.I.G. ruined our economy, used our bailout cash for bonuses, and now, they’re suing us with our own money because we don’t like their offshore tax havens. Can we load this company into a cannon and shoot it into the sun yet?

A.I.G. Sues U.S. for Return of $306 Million in Tax Payments [The New York Times]
(Photo: Thanks to Michael!)

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