Enron Corp. paid nearly zilch in federal income taxes for five of the six years preceding its collapse into bankruptcy in December 2001, according to a report issued by the congressional Joint Committee on Taxation last Thursday.

Between 1996 and 2001, Houston-based Enron — which reported consolidated revenues of more than $100 billion in 2000, and was ranked seventh on the Fortune 500 list of the largest U.S. companies for 2001 — paid out only $63.2 million in total federal taxes, said the 2,700-page report, which culminated a year-long investigation into the company’s tax records. The $63.2 million tax payment was made in 2000.

The company paid no federal taxes for the taxable years from 1996 through 1999, and next to nothing (only $13,331) for 2001, the report noted.

The Internal Revenue Service (IRS) has completed its examination of Enron’s tax returns through 1995 and currently is reviewing the company’s tax records from 1996 through 2001. IRS adjustments increased Enron’s taxable income by $361 million for 1988 through 1994, which resulted in additional tax payments of $4.3 million for those years, according to the report. Adjustments for 1995 will not be known until the IRS finishes its 1996-2001 review.

“It is impossible to fully assess Enron’s ultimate tax liability until the IRS examination of Enron’s tax returns for 1996 through 2001 is completed and the bankruptcy court has reviewed the IRS proof of claim,” which is expected to be filed by March 31 of this year, it said.

Enron “came to view the role of its tax department as more than managing its federal income tax liabilities. Rather, Enron’s tax department became a source for financial statement earnings, thereby making it a profit center for the company,” the report noted.

“Enron not only engaged in accounting gimmicks to boost stock prices — but Enron repeatedly abused the tax code. And they had help from investment bankers, lawyers and accountants,” said Sen. Max Baucus of Montana, the ranking Democrat on the Senate Finance Committee, which initiated the investigation into Enron’s tax practices a year ago.

“Enron and its advisors conspired to mine the tax code for tax schemes. They concealed the schemes in a complex maze of entities and transactions. They ensured that no one — particularly the IRS — would ever discover what they were up to,” he noted. The IRS was “kept in the dark and out-maneuvered,” while company executives “walk[ed] away with millions — perhaps billions.”

In light of the report, Senate Finance Chairman Charles Grassley (R-IA) and Baucus said they supported swift enactment of legislation that was recently passed by the committee to rein in the use of tax shelters by requiring mandatory disclosure to the IRS. “Mr. Chairman, I [also] look forward to working with you to develop additional legislation based on the report,” Baucus said.

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