In 2022, McDonald’s France agreed to pay a total of €1.25 billion in fines, penalties, and back taxes to settle a tax evasion case after years of negotiations.1 McDonalds France was accused of hiding French profits in lower-tax Luxembourg from 2009 through 2020, and reporting lower profits in France. An investigation was started in 2016 after union officials reported the company for tax evasion. The settlement is made up of a €508 million fine and €737 million in back taxes and is the second-biggest tax settlement in French history. (The largest was the €2.1 billion fine paid by aircraft builder Airbus in 2020.)
Last year, the U.S. returned $1.2 million in forfeited funds to the government of Romania, stemming from a tax fraud scheme involving diesel fuel.2 A Romanian couple avoided Romanian taxes on imported diesel fuel by claiming the fuel was a lower grade of industrial and maritime fuel. The untaxed income from the sale of the higher value diesel was laundered through a number of bank accounts and shell companies controlled by the couple, and resulted in an overall $58.677 million tax loss to Romania. Before they could be arrested, the couple fled to Washington state, but eventually were extradited, leaving behind a large piece of property and assets that were sold.
A U.S. Consulate officer in Vietnam was charged with conspiracy after participating in a scheme where nonimmigrant visa applicants paid him to approve their visas, netting him over $3 million.3 He initially kept his payments in a home safe, but as the stash grew, he purchased nine properties in Thailand to attempt to hide the proceeds of the scam. On his tax return for the year at issue, he reported his income from the Consulate Office, but did not report the bribery income. As part of his plea agreement, he agreed to sell the Thailand properties to help pay off the money judgement against him. The properties were sold at a loss, which the taxpayer deducted from his bribery proceeds. But the Tax Court determined that loss deductions are disallowed where the deduction would frustrate federal or state policy. Allowing a deduction for losses arising from the properties obtained through illegal activities would undermine public policy because a portion of the forfeiture would be borne by the Government.
