New York Attorney General Eric Schneiderman announced a whistleblower-initiated $40 million settlement with Alabama-based investment firm Harbert Management Corp. over unpaid state income taxes claimed instead in lower-tax Alabama.
The dispute arose out of 2015 whistleblower allegations that members of Harbert failed to pay millions of dollars in taxes. New York law requires businesses that operate both in and out of New York to apportion taxes on income derived in New York.
The settlement alleges that Harbinger Partners Offshore Managers LLC, a $26 billion New York City hedge fund sponsored by Harbert, failed to pay certain required taxes in New York from 2004 through 2009. Instead, Harbinger paid taxes in Alabama, where rates were much lower.