Using a tax shelter called a CRUT (charitable remainder unitrust) that was held by the Church of Latter Day Saints (Mormons), along with foreign tax credits and deferred capital gains losses, Mitt Romney was theoretically able to pay zero taxes (legally) every single year from 1996 to 2009. Why did he stop after 2009? Because he would make public his 2010 tax return, that is why.
This tax loophole was killed by Congress in 1997. However, those including Romney that were already using it were allowed to continue it. The way it works, is that Romney makes a "charitable" contribution to the Church of Latter Day Saints and it goes into a trust. Since the trust is held by the church, the money is tax deferred. Any capital gains, are non taxed because of the charities status. Like an annuity, the donor gets a charitable tax deduction and an stream of cash payments. When Romney dies, the church accepts full ownership..
Bloomsberg's attorneys estimate as the Romneys have received these payments, the money that will potentially be left for charity has declined from at least $750,000 in 2001 to $421,203 at the end of 2011.....
Romney has refused to answer anything on this topic. His campaign puts out that it was all legal