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Econ Professor Sues Citigroup, Saying Bank Dodged 800 Million in NYS Taxes

By:
Chris Gaetano
Published Date:
Oct 20, 2015
nysimageAn economics professor from Indiana University has taken Citigroup to court, accusing it of improperly using a federal tax break to avoid $800 million worth of taxes to Albany, according to the New York Times. Essentially, the plaintiff said that during the height of the financial crisis, Citigroup received $45 billion in order to prevent it from collapsing and taking huge sections of the economy with it. Later, the IRS issued a notice that allowed it, and other rescued banks, to claim special deductions on losses caused by the financial crisis, which meant keeping a large portion of the money that had been given to it as part of the bailout. While the plaintiff also believes the IRS violated federal law in issuing this notice, he added that "it isn't clear why New York taxpayers have to forfeit revenues in pursuit of some federal policy objective of the Obama administration," according to the Buffalo News. Basically, regardless of what the IRS decided, New York doesn't have to go along with it, and so the bank owes the state $2.4 billion, according to the plaintiff, a sum that includes both the back taxes as well as penalties from the New York False Claim Act, under which he is suing. 

Citigroup's lawyers said the case is without merit. 

The New York Attorney General's Office had been invited to take part in the suit, but ultimately declined. 

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