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Local Law Firms Home > Taxation Law News > AIG Sues IRS to Recover Taxes Troubled insurance company American International Group Inc. (AIG) is once again in the spotlight, this time for bringing a new twist to taxation law. The company has filed suit against the IRS to recover $30.2 million in alleged overpayment of taxes for 1991. Apart from the fact that the matter in dispute is over two decades old, there is a lot more irony in this case. For starters, the U.S. government is the majority owner of AIG, having taken a 90 percent stake to bail out the company with $182.3 billion. Even after heavy post-recession divestment of its stake, the U.S. Treasury Department still owns 61 percent of AIG, which works out to some 1.06 billion shares of AIG common stock. It so happens that the IRS is one of the agencies that are a part of the Treasury. So it comes down to taxpayer money being spent in a federal court by both sides and the court so that the U.S. Treasury Dept. can sue itself. Secondly, it's not everyday that a taxpayer sues the IRS to recover taxes, because it usually works the other way round. In this case, AIG says they had to do it because the six year statute of limitations for the matter is about to expire. AIG had filed the refund request with the IRS in 2007. The case is American International Group Inc. v. U.S., filed in the Court of Federal Claims in Washington D.C. AIG is asking for the $30.2 million payment on the basis of Section 6611 of the Internal Revenue Code, which deals with interest allowable on overpaid taxes. AIG says they overpaid taxes for 1991 and underpaid for 1997, 1998 and 1999. After factoring in the interest on the pending refund, AIG alleges it is owed a net payment of $30.2 million.
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