Paul L. Caron

Tuesday, October 6, 2015

Avi-Yonah: Too Big to Tax? Will The IRS Enforce The Arm's Length Standard Against Vanguard?

VanguardFollowing up on my previous post, Avi-Yonah: Vanguard Owes $35 Billion In Back Taxes:  Reuven S. Avi-Yonah (Michigan), Too Big to Tax? Vanguard and the Arm’s Length Standard, 149 Tax Notes 105 (Oct. 5, 2015):

In this article, Avi-Yonah asserts that the Vanguard Group has been allowed to dominate the mutual fund industry and avoid billions of dollars in corporate taxes by providing at-cost services to commonly controlled funds, in violation of the arm’s-length standard. He argues that the IRS could successfully challenge Vanguard’s transfer pricing but warns that the tax liability would ultimately be borne by the millions of Vanguard fund investors.

Avi-Yonah is an expert witness for the claimant in a whistleblower action against Vanguard, but he is compensated without regard to the outcome of that case.

Scholarship, Tax | Permalink


"So when did taking care of your customer become tax fraud?"

When you get paid a mint like Avi-Yonah did to write the "expert" report for the shady plaintiffs' law firm that brought the lawsuit.

Posted by: GU | Oct 9, 2015 7:20:13 PM

Try as I might I can’t get my head around the premise of this claim; namely, Vanguard does not charge a high enough management fee. The very premise of index funds, particularly Vanguard, is to increase investors ROI by minimizing transaction costs and fees. So when did taking care of your customer become tax fraud?

Posted by: Dale Spradling | Oct 6, 2015 12:58:20 PM

Rooting for Vanguard on this one. Their fund-owned structure feels like a members providing services to themselves.

Posted by: lv | Oct 6, 2015 10:51:16 AM