loophole
American Heritage Dictionary:
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loop·hole
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technicality making it possible to circumvent a law’s intent without violating its letter. For instance, a tax shelter may exploit a loophole in the tax law, or a bank may take advantage of a loophole in the glass-steagall act to acquire a Discount Broker.
| Loonie, Lookback Option | |
| Loose Credit, Loss |
1. See arrow loop.
2. In a fortification, one of a number of long, narrow slits in the walls, usually widening inward to permit small arms to be fired over a wide angle at an enemy.
3. Same as slit ventilator.
West's Encyclopedia of American Law:
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Loophole
This entry contains information applicable to United States law only.
An omission or ambiguity in a legal document that allows the intent of the document to be evaded.
Loopholes come into being through the passage of statutes, the enactment of regulations, the drafting of contracts or the decisions of courts. A loophole allows an individual or group to use some gap in the restrictions or requirements of the law or contract for personal advantage without technically breaking the law or contract. In response, lawmakers and regulators work to pass reforms that will close the loophole. For example, in the federal tax code, a long-standing loophole was the so-called tax shelter, which allowed taxpayers to reduce their tax debt by making investments. Although not closed entirely, this loophole was substantially reduced by the Tax Reform Act of 1986 (Pub. L. No. 99-514, 100 Stat. 2085 [codified as amended in numerous sections of 26 U.S.C.A.]).
Loopholes exist because it is impossible to foresee every circumstance or course of conduct that will arise under, or in response to, the law. Loopholes often endure for a time because they can be difficult to close. Those who benefit from a loophole will lobby legislators or regulators to leave the loophole open. In the case of election campaign financing, it is the legislators themselves who benefit. The Federal Election Campaign Act Amendments of 1974 (Pub. L. No. 93-443, 88 Stat. 1263 [1974] [codified as amended in scattered sections of 2 U.S.C.A. §§ 431-455 (1988)]) were passed to limit private financing of federal election campaigns. But loopholes in the law allow these limits to be circumvented. Through one loophole, intermediaries can pool or "bundle" contributions so that the limit is not legally exceeded. Through another, money raised specifically for building political parties (soft money) is funneled into campaigns.
See: lobbying.
Investopedia Financial Dictionary:
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Loophole
A technicality that allows a person or business to avoid the scope of a law or restriction without directly violating the law. Used often in discussions of taxes and their avoidance, loopholes provide ways for individuals and companies to remove income or assets from taxable situations into ones with lower taxes or none at all.
Loopholes are most prevalent in complex business deals involving tax issues, political issues and legal statutes. They can be found within contract details, building codes, tax codes, among others.
Investopedia Says:
A person or company utilizing a loophole isn't considered to be breaking the law, but circumventing it in a way that was not intended by the regulators or legislators that put the law or restriction into place. Most loopholes will close in time, as those who have the power to do so rewrite the rules to cut off the opportunity for loophole advantage. Some tax loopholes exist perennially, especially in nations like the United States where the intricate tax code amounts to tens of thousands of pages - which can lead to many opportunitoes for those seeking to exploit it.
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Random House Word Menu:
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categories related to 'loophole'
- Income Tax - loophole: means of reducing taxes by careful use of laws; law written to benefit one class or group of taxpayers
- Strategy and Tactics - loophole: means of escape, esp. through an ambiguity or omission in a document permitting an evasion or misconstruction of its intent
Wikipedia on Answers.com:
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Loophole
For other uses, see Loophole (disambiguation).
A loophole is an ambiguity in a system, such as a law or security, which can be used to circumvent or otherwise avoid the intent, implied or explicitly stated, of the system. Loopholes are searched for and used strategically in a variety of circumstances, including taxes, elections, politics, the criminal justice system, or in breaches of security.
Historically, arrow slits were narrow vertical windows from which castle defenders launched arrows from a sheltered position, and were also referred to as "loopholes."[1] Thus a loophole in a law often contravenes the intent of the law without technically breaking it, much as the small slit window in a castle wall provides the only ready means of gaining entry without breaching or destroying the wall or a gate. For example, in some places, one may avoid paying taxes to the jurisdiction by forming a second residence in another location, or a commercial property can be built in a residential zone if it is made also for residential use.[citation needed]
In a security system, the one who breaches the system (such as an inmate escaping from prison) exploits the loophole during breach. Such weaknesses are often studied in advance by the violator, who spends time observing and learning the routine of the system and sometimes conducts surreptitious tests until such a loophole can be found.
Examples of legal loopholes:
- In 2005, Wal-Mart planned a store in Calvert County, Maryland. While a law in the county restricted the size of a retail store to 75,000 square feet (7,000 m2), Wal-Mart considered a plan that would dodge this restriction by building two separate smaller stores. Though Wal-Mart later withdrew this controversial plan[2], the plan highlighted a legal loophole.
- Parts of the interiors of U.S. bound Ford Transit Connect were stripped immediately upon importation to circumvent the 1963 Chicken Tax, which imposes a 25% tariff on imported light trucks. Ford imports all Transit Connects as "passenger vehicles" with rear windows, rear seats and rear seatbelts.[3] The vehicles are exported from Turkey, arrive in Baltimore, and are converted into "light trucks": rear windows are replaced with metal panels and rear seats removed.[3] The process exploits a loophole in the customs definition of a commercial vehicle. As cargo does not need seats with seat belts or rear windows, the mere presence of those items exempts the vehicle from light truck status. The conversion process costs Ford only hundreds of dollars per van, but saves thousands in taxes.[3]
See also
References
- Notes
- ^ Castle Loopholes at www.castles.me.uk
- ^ Paley, Amit R. (May 17, 2005). "Wal-Mart Drops Plan for Side-by-Side Calvert Stores". The Washington Post. http://www.washingtonpost.com/wp-dyn/content/article/2005/05/16/AR2005051601271.html. Retrieved May 11, 2010.
- ^ a b c "To Outfox the Chicken Tax, Ford Strips Its Own Vans". The Wall Street Journal, Matthew Dolan, September 22, 2009. September 23, 2009. http://online.wsj.com/article/SB125357990638429655.html.
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Translations:
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Loophole
Dansk (Danish)
n. - skydeåbning, skydeskår, kighul, lufthul, smuthul, smutvej
v. tr. - lave smuthuller/kighuller i
Nederlands (Dutch)
uitvlucht, maas (in wet), kijkgat, schietgat, sluipgat, kijk-/schietgat maken, opening zoeken/ vinden
Français (French)
n. - lacune, (Archit) meurtrière
v. tr. - exploiter une lacune
Deutsch (German)
n. - Schießscharte, Lücke
v. - Öffnungen machen
Ελληνική (Greek)
n. - πολεμίστρα, υπεκφυγή, διέξοδος, "παράθυρο", (καθομ.) "παραθυράκι" νόμου κ.λπ.
v. - ανοίγω πολεμίστρα
Italiano (Italian)
scappatoia, feritoia, asola, fare asole, aprire feritoie
Português (Portuguese)
n. - seteira (f), fenda (f), saída (f), escapatória (f)
v. - fazer um buraco
Русский (Russian)
амбразура, лазейка
Español (Spanish)
n. - aspillera, tronera, escapatoria, evasiva, pretexto
v. tr. - hacer aspilleras o troneras
Svenska (Swedish)
n. - skottglugg, titthål, ljusspringa, kryphål, smyghål
v. - förse med skottgluggar etc.
中文（简体）(Chinese (Simplified))
枪眼, 射弹孔, 望孔, 在...上开枪眼
中文（繁體）(Chinese (Traditional))
n. - 槍眼, 射彈孔, 望孔
v. tr. - 在...上開槍眼
한국어 (Korean)
n. - 작은 창문 , 요새 등의 총안 , 구멍
v. tr. - 총안을 내다
日本語 (Japanese)
n. - 銃眼, 逃げ道
v. - 狭間をつくる
العربيه (Arabic)
(الاسم) فتحه الرمى, كوة, فجوة, منفذ, مهرب (فعل) يزود بفتحات للرمى
עברית (Hebrew)
n. - פירצה (בחוק), חרך-ירי, סדק בקיר
v. tr. - פירצה (בחוק), חרך-ירי, סדק בקיר
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American Heritage Dictionary
The American Heritage® Dictionary of the English Language, Fourth Edition Copyright © 2007, 2000 by Houghton Mifflin Company. Updated in 2009. Published by Houghton Mifflin Company. All rights reserved.
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Barron's Finance & Investment Dictionary
Dictionary of Finance and Investment Terms. Copyright © 2010 by Barron's Educational Series, Inc. All rights reserved.
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McGraw-Hill Dictionary of Architecture & Construction
McGraw-Hill Dictionary of Architecture and Construction. Copyright © 2003 by McGraw-Hill Companies, Inc. All rights reserved.
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West's Encyclopedia of American Law
West's Encyclopedia of American Law. Copyright © 1998 by The Gale Group, Inc. All rights reserved.
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This article is licensed under the Creative Commons Attribution/Share-Alike License. It uses material from the Wikipedia article Loophole.
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