Hey, Mitt… about that IRA…

In a letter Thursday to senior officials at the Treasury and Labor departments, Reps. George Miller (D-CA), Sander Levin (D-MI), and Chris Van Hollen (D-MD) want to know: Is this legal? How easy is this strategy to get away with? How much does it cost the government every year? And what can be done to end the practice?

“[W]e are alarmed to learn that wealthy taxpayers may be taking advantage of a tax subsidy that is designed to provide for retirement to instead accumulate massive amounts of tax-sheltered assets,” the lawmakers write. “Given your commitment to the rule of law and equitable treatment of taxpayers, we hope that you will evaluate this issue carefully to ensure that a select few are not being provided with a loophole that allows for wrongful tax evasion.”

…

“Some experts have expressed the view that the investments made through these accounts and plans may have been assigned a nominal value that was significantly lower than the fair market value of the investments, perhaps using a liquidation value methodology. In particular, this strategy has been cited as one explanation for how presidential candidate Mitt Romney’s IRA is valued at between $20 and $101 million despite the annual contribution limits that apply to tax-preferred retirement accounts and plans.”

To translate, Romney could have skirted the annual contribution limit if his IRA invested heavily in Bain projects by dramatically lowballing the value of the stakes.