AIG Says Government Owes It $30M for 1991 Tax Overpayment

NU Online News Service, July 10, 2:25 p.m. EDT

American International Group is entitled to over $30 million from the government due to overpayment of taxes in 1991, according to a complaint the insurer filed in the United States Court of Federal Claims. 

The complaint states that AIG overpaid taxes in 1991 and underpaid taxes in 1997, 1998 and 1999. “AIG has made its best efforts to claim netting benefits to which it would be entitled as a result of matching the tax overpayments determined for its taxable year 1991 against equivalent tax underpayments that so far have been determined for its taxable years 1997, 1998 and 1999,” the complaint continues.

All told, AIG says it is entitled to additional statutory interest of around $30.2 million as of June 30, 2012.

The complaint notes that AIG is bringing the suit because the statute of limitations on suing for additional overpayment interest could run out before a final resolution is reached regarding the company's tax liabilities for 1997-1999.

In March this year, AIG came under fire from four former members of an oversight panel that monitored the Troubled Asset Relief Program due to a tax break the company received that largely drove its $19.8 billion 2011 fourth-quarter profit.

AIG, which received billions in government assistance after it ran into trouble in 2008, did not pay taxes on the heavy losses it took in the past and was given tax breaks on future profits. AIG tapped into about 65 percent of the money, $17.7 billion, in that pool for the fourth quarter after assessing its situation.

Elizabeth Warren, the panel's former chair, said at the time, “When the government bailed out AIG, it should not have allowed the failed insurance giant to duck taxes for years to come. That kind of bonus wasn't necessary to protect the economy. It also gives AIG a leg up against its competitors at a time when everyone should have to play by the same rules—especially when it comes to paying taxes.”

However, AIG shot back with its own statement. “AIG is adhering to well-settled tax law that a company can use losses to offset its income,” the company said. “More important, AIG has repaid the American taxpayer more than $45 billion to date and is committed to taking all possible steps so that American taxpayers can continue to recoup their investment in AIG at a profit.”