Dear Senators Baucus and Grassley:
Following on conversations with your staff, I have been authorized to advise you that Enron intendsto provide the Finance Committee with consent under Code section 6103 to public disclosure of itsrelevant confidential tax return information, along the lines described below.
We understand that the Committee is interested in determining whether there are, in the events thatgave rise to Enron's bankruptcy, significant tax policy issues of relevance beyond Enron's particularcircumstances such that they may need to be addressed through changes to the federal tax laws. Theconsent will be intended to apply to information contained in Enron's tax returns and relatedmaterials which pertains specifically to such issues, and will contemplate the publication of suchinformation in one or more Committee Reports addressing those issues and any proposed legislativerecommendations that the Committee develops as part of its review of such issues, including inhearings that the Committee may conduct following issuance of the Reports.
Working with your staff, we anticipate sorting out the specific terms of Enron's consent in the verynear future. We look forward to cooperating fully with your staff and the staff of the JointCommittee on Taxation during the course of what we anticipate will be an orderly and constructivereview.
Sincerely,
Fred T. Goldberg, Jr.
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Feb. 15, 2002 Lindy L. Paull, Esq.
Chief of Staff Joint Committee on Taxation
1015 Longworth House Office Building Washington, DC 20515
Dear Ms. Paull:
Recent press reports have raised troubling questions about Enron Corp. and related entities'("Enron") compliance with the Federal income tax laws, including the use of entities in tax havencountries, other special purpose entities, and questionable tax shelter arrangements. According tosome press reports, Enron may have used such arrangements to improperly avoid paying corporateincome taxes.
We are also concerned by reports that thousands of Enron employees have suffered pension lossesin recent months while corporate insiders appear to have reaped substantial profits during that sameperiod. Qualified pension plans and many other compensation arrangements receive considerabletax benefits and are otherwise facilitated by the Federal tax laws. Recent reports about Enron raiseconcerns that the objectives behind these tax law provisions are not being fulfilled.
Accordingly, pursuant to Internal Revenue Code section 8022, we direct the staff of the JointCommittee on Taxation to undertake a review of Enron's Federal tax returns, tax information, andany other relevant information as you deem necessary, from 1985 to the present, to assist us inevaluating if the Federal tax laws facilitated any of the events or transactions that preceded Enron'sbankruptcy. The review should examine the adequacy of present tax law, particularly in the areasof tax shelters and offshore entities. It should also include a review of the compensationarrangements of Enron employees, including tax-qualified retirement plans, nonqualified deferredcompensation arrangements, and other arrangements, and an analysis of the factors that may havecontributed to any loss of benefits and the extent to which losses were experienced by differentcategories of employees.
We ask that you transmit your findings, and recommendations for reform, to the Senate Committeeon Finance as soon as practicable. We also request that you keep the Committee updated on theprogress on your study and advise us on any problems you may have in securing timely access to theinformation needed to perform this review.
We want to thank you and your staff for undertaking this important review and look forward toreceiving your report.
Sincerely yours,
Max Baucus, Chairman
Charles E. Grassley, Ranking Member
