Stephen Shay

The Treasury Department is considering new regulations that would make corporate inversions less profitable. Hedge fund managers, investment bankers and others are handicapping the timing and scope of any new rules and to whom they would apply. Possibilities include reclassifying certain debt held by United States subsidiaries of foreign corporations as equity, further limiting earnings stripping or restricting the repatriation of untaxed offshore cash from corporations that have gone through an inversion. Another question is whether any new regulations will hold up in court. Even Treasury Secretary Jacob J. Lew questioned whether his department had the legal authority to act unilaterally. But after Stephen Shay, a law professor at Harvard University, published an article urging Treasury to act, the department’s lawyers began developing some options. Mr. Shay suggested that by looking beyond Section 7874, the specific code section that addresses inversions, the Treasury might find other ways to curb some of the economic tax benefits of an inversion. In my view, Mr. Shay’s suggestions are indeed within the lawful authority of the Treasury Department.

Burger King may have taken a lot of flack in the past week for a deal that should curb its US tax bill but in many ways it is consistent with the burger chain's aggressive tax-reduction strategies in recent years…“I would be surprised if in five years' time, their tax rate does not come down reasonably dramatically,” said Professor Stephen Shay, from Harvard Law School, who has testified to Congress on corporate taxation.

Treasury officials will be especially careful about what information they share with anyone who calls or asks questions, a former agency official said. “To the extent that you work on something that might be market-moving, you hunker down,” said Stephen Shay, who was the top Treasury Department international tax official earlier in Obama’s presidency. “Particularly when you don’t know what the decision’s going to be.” Shay, now a Harvard Law School professor, wrote a Tax Notes article in July urging the administration to think more broadly about its regulatory authority.

More than a decade ago, when corporate inversions first came under scrutiny, a group of leading New York tax lawyers took a principled stand and called for urgent action to stop these deals….The deafening silence on the policy of inversions comes at a time when tax partners at corporate firms face mounting pressure to boost their revenues. “Because of the highly competitive legal environment, tax lawyers at major firms increasingly feel less free to speak their mind on tax policy issues than they did in the past,” says Stephen Shay, a professor at Harvard Law School who was a tax partner at Ropes & Gray for 22 years…Shay points out that the inversion discussion today is more complex than in 2002, when the deals under attack were more aggressive. Back then, companies could do a “naked inversion” by simply creating a foreign shell in a tax haven like the Cayman Islands.

The Obama administration is exploring a range of possible weapons in the tax code to try to deter companies from relocating overseas for tax purposes through so-called inversion mergers…But the White House's position was upended in part by Harvard Law School Professor Stephen Shay, a former administration official who wrote an article on July 29, 2014, for Tax Notes, an influential publication in tax circles. In it, he outlined how the administration could change the tax code to "take the tax juice out of corporation expatriations." "I just started asking the question, 'What could be done with regulation rather than legislation,'" said Mr. Shay. His thoughts quickly reverberated at the top M&A firms and among officials in Washington. To clamp down on the benefits of inverting, he suggested, the Treasury could take aim at multiple parts of the tax code.

Harvard Law School professor Stephen Shay may have single-handedly crashed the corporate inversion party. The U.S. Treasury Department has in recent days begun weighing how it could use its power to write regulations that would eliminate some of the key economic benefits U.S. corporations get when they acquire a non-U.S. company. Mr. Shay, who served for seven years in the Treasury during two different administrations and spent 22 years as a tax partner at Ropes & Gray LLP, appeared to be the first person to make the government aware of its powers to crack down on the advantageous tax treatment of inversions in an article published on July 29, 2014 in Tax Notes, a publication closely followed by tax professionals. “I just started asking the question, ‘What could be done with regulation rather than legislation’,” Mr. Shay said in an interview.

The Obama administration is weighing plans to circumvent Congress and act on its own to curtail tax benefits for United States companies that relocate overseas to lower their tax bills, seeking to stanch a recent wave of so-called corporate inversions, Treasury Secretary Jacob J. Lew said on Tuesday…Just days after the president’s speech, Stephen E. Shay, a former Obama administration Treasury Department official who now teaches at Harvard Law School, suggested in an article in the trade journal Tax Notes that it was within Mr. Obama’s power to act alone. “I’m really concerned that we are losing a significant portion of our corporate tax base that you’re not going to get back,” Mr. Shay said.

President Barack Obama could act without congressional approval to limit a key incentive for US corporations to move their tax domiciles abroad in so-called "inversion" deals, a former senior US Treasury Department official said on Monday. By invoking a 1969 tax law, Obama could bypass congressional gridlock and restrict foreign tax-domiciled U.S companies from using inter-company loans and interest deductions to cut their US tax bills, said Stephen Shay, former deputy assistant Treasury secretary for international tax affairs in the Obama administration.

The U.S. Treasury Department should use immediate stopgap regulations to make offshore transactions known as corporate inversions less lucrative, said the department’s former top international tax lawyer. The administration can unilaterally limit inverted companies from taking interest deductions in the U.S. or from accessing their foreign cash without paying U.S. taxes, Stephen Shay said in an interview and in an article published today in Tax Notes. “If you take away the incentives, a large portion of these deals would not happen because they are indeed tax-motivated,” said Shay, who left the Obama administration in 2011 and is now a professor at Harvard Law School.

Jamie Dimon, the chief executive of JPMorgan Chase, recently said, “I love America.” Lloyd Blankfein, the chief executive of Goldman Sachs, wrote an opinion article saying, “Investing in America still produces the best return.”Yet guess who’s behind the recent spate of merger deals in which major United States corporations have renounced their citizenship in search of a lower tax bill? Wall Street banks, led by JPMorgan Chase and Goldman Sachs…“This is an economic game. There are no virgins anywhere,” said Stephen E. Shay, a professor at Harvard Law School and a former deputy assistant Treasury secretary for international tax affairs in the Obama administration. “We can’t look to the banks to stop inversions. They will not look at this based on morality. They will look at it on the basis of fees.”

President Barack Obama could act without congressional approval to limit a key incentive for U.S. corporations to move their tax domiciles abroad in so-called "inversion" deals, a former senior U.S. Treasury Department official said on Monday. By invoking a 1969 tax law, Obama could bypass congressional gridlock and restrict foreign tax-domiciled U.S companies from using inter-company loans and interest deductions to cut their U.S. tax bills, said Stephen Shay, former deputy assistant Treasury secretary for international tax affairs in the Obama administration. He also served as international tax counsel at Treasury from 1982 to 1987 in the Reagan administration.

Nothing about the narrow cream-coloured lobby at 160 Aldersgate Street in the City of London financial district gives a hint of its role at the centre of the offshore oil industry. That's because the building is occupied by a law firm. Yet, on paper at least, it is also home to Rowan Companies, one of the largest operators of drilling rigs in the world…"The UK has made a very clear policy decision to engage in tax competition for multinationals. It's fair to say it's rivalling Ireland," said Stephen Shay Professor of Law at Harvard University who has testified to Congressional investigations into corporate tax reform.