The U.S. Treasury Department is sounding the alarm over a number of Wall Street tax strategies, suggesting some of them may be “too good to be true,” according to a report from Bloomberg News published Tuesday.
At an industry event held in New York, Treasury officials told attendees that certain financial products may be crossing into abusive territory and that the department is actively reviewing what tools it has at its disposal to respond, Bloomberg reported.
While no formal new guidance was announced, officials indicated they want open communication with the financial industry before any firm positions are taken — warning that delays could leave investors exposed to greater risk.
Among the products drawing scrutiny are so-called 351 conversions, box-spread exchange-traded funds, products designed to offset ordinary income, and funds that sidestep dividend income by switching between other ETFs, according to the report.
Kevin Salinger, deputy assistant secretary for tax policy, addressed the issue directly at a Wall Street Tax Association seminar. “We’re not here to be over-broad or disruptive, but we are also not prepared to turn the blind eye to aggressive planning,” he said, as quoted by Bloomberg.
The heightened attention comes as tax-conscious investment products have become increasingly popular among high-net-worth Americans looking to shrink their tax bills.
