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JUSTICE DEPARTMENT: NEVER MIND...

December 21, 2004

The Justice Department went after xelan, Inc. with both barrels, freezing over $500 million in investment accounts with great fanfare. xelan offshore marketed tax-savings arrangements to physicians.

The Justice Department promptly lost a critical court ruling and the assets were unfrozen. Now the Justice Department has quietly withdrawn its lawsuit, slinking away in embarassing defeat.

The Quatloos website says the department will now probably go after the participants in xelan's plans, rather than go after xelan itself:

   Of course, as Yogi Bera would say, "It ain't over until 
   it's over," and probably the next step will be for the 
   IRS to start assessing some of the xelan participants, 
   but that gives xelan the chance to win 
   physician-by-physician, instead of (as the DOJ hoped) 
   lose en masse.

   In the interim, this is a stunning defeat for the DOJ, 
   which is admitting defeat (at least for now) by 
   voluntarily dismissing its injunction action. But anybody 
   who thinks that the DOJ is permanently going away is 
   crazy. Some very bright and experienced minds in 
   Washington will lick their wounds for a couple of 
   weeks, and then settle on a new strategy. So stay 
   tuned

Prior Tax Update Coverage:

DOCTORS WIN A ROUND?
XELENT ADVENTURES OF XELAN

TaxProf Blog coverage

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