US Treasury won't tolerate 'abusive' Wall Street tax strategies, Bessent says
XLF•Bessent says Treasury will not tolerate tax dodges
The U.S. Treasury welcomes innovation in financial markets, but will not tolerate tax strategies aimed at dodging U.S. tax rules, Treasury Secretary Scott Bessent said on Wednesday, doubling down on a message delivered to Wall Street this week.
"Tax rules should reward investment, not abusive financial engineering," Bessent said in a posting on X. "USTreasury welcomes innovation in our financial markets, but we will not turn a blind eye to abusive Wall Street tax dodges or tolerate products designed to exploit our federal tax code."
Bessent noted that investors should think twice if presented with a tax pitch that sounded too good to be true. He added that Treasury was examining Wall Street tax products that may exploit the tax code and any tax strategies that may cross the line.
Treasury scrutiny focuses on tax-aware investment products
Senior Treasury officials made similar comments earlier this week at an industry gathering in New York, warning that some of these products may be abusive.
In their remarks to the Wall Street Tax Association, the officials stopped short of announcing new guidance but said they expected a serious dialogue with the market before positions hardened and investors were placed at more risk.
The products under scrutiny include so-called 351 conversions, box-spread exchange-traded funds, products that offset ordinary income, and funds that avoid dividend income by flipping between other ETFs, the official said.
The comments come as tax-aware investment products have gained popularity among wealthy U.S. investors seeking to reduce tax liabilities.
