General News It is tough to pick an accountant these days. Completely lost in the Arthur Anderson / Enron Scandal was the story below which has resulted in a $15,000,000 fine for Ernst and Young. Following that is the story where KPMG and BDO were being investigated for the same offence and recently 4 KPMG partenrs and the firm itself were indicted for fraud for inappropriate audits of XEROX over a seven year period. see http://www.sec.gov/news/press/2003-16.htm

The following indicates that the IRS is investigating over 90 professional accounting firms. OUCH!!

IR-2003-84, July 2, 2003

WASHINGTON, DC - The Internal Revenue Service today announced a closing agreement with Ernst & Young, LLP, resolving issues relating to an examination of Ernst & Young's compliance with the registration and list
maintenance requirements regarding the firm's marketing of tax shelters.
The agreement requires Ernst & Young to make a non-deductible payment of $15 million.

In addition to the payment, Ernst & Young has agreed to work with the IRS to ensure ongoing compliance with the registration and list maintenance provisions of the Internal Revenue Code and regulations. To this end, Ernst & Young will implement a Quality and Integrity Program to ensure the highest standards of practice and ongoing compliance with the law and regulations. The IRS may, upon its request, review documents prepared as part of this program.

"We are pleased that Ernst & Young has cooperated fully with the IRS in resolving these matters," said IRS Commissioner Mark W. Everson. "In particular, the ability of the IRS to review the firm's compliance on an
ongoing basis will help to reduce the likelihood of future violations of the registration and list maintenance requirements. This represents a real breakthrough and is a good working model for agreements with practitioners."

"This agreement constitutes a significant development in our continuing efforts to identify potentially abusive tax transactions," said Everson.

The examination is one of over 90 investigations the IRS has opened of professional service firms.

The closing agreement included a disclosure authorization that allowed the IRS to issue this release. Section 6103 of the Internal Revenue Code strictly limits the IRS in disclosing taxpayer information

(202) 514-2007
TDD (202) 514-1888


WASHINGTON, D.C. – The Justice Department, on behalf of the Internal Revenue Service, filed suit today in federal court in Washington, D.C. against KPMG LLP, asking the court to compel the public accounting firm to disclose to the IRS information about all tax shelters it has marketed since 1998. In a similar suit filed today in Chicago, the Department asked the federal court there to enforce summonses issued to the public accounting firm, BDO Seidman, LLP, for information related to its marketing of tax shelters since1995.

The tax code requires promoters of tax shelters to register each tax shelter with the IRS before offering it for sale. It also requires promoters and sellers of certain tax shelters to keep lists of all the investors in each shelter, and to make that list available to the IRS on ten days' notice. Promoters and sellers that do not register the tax shelter or maintain or produce to the IRS the list of investors may be liable for penalties. The tax code also imposes penalties for promoting abusive tax shelters.

"Certain tax shelter transactions are devised to exploit the complexity of the tax law to claim benefits Congress never intended," Eileen J. O'Connor, Assistant Attorney General for the Department's Tax Division. "The Justice Department is working with the IRS in its efforts to root out and shut down abusive tax shelter promotions."

According to the court filings, KPMG has failed to provide all the documents the IRS has requested in connection with its probe into KPMG's compliance with these requirements and its potential liability for penalties. Although KPMG has produced many documents to the IRS, it has also withheld a substantial number of documents that the government has requested.

Similarly, the court papers filed in the case against BDO Seidman seek to obtain information concerning tax shelter transactions that the Government believes BDO Seidman has marketed. BDO denies that it has promoted any such transactions.

"Today's action demonstrates that the IRS will vigorously use all enforcement authority available to it to obtain essential information from promoters of tax shelters," said IRS Commissioner Charles O. Rossotti. "It is unacceptable for those holding themselves out as tax professionals providing legitimate tax advice to refuse to comply with legal disclosure requirements. The U.S. tax system is based on the principle of responsible self assessment by taxpayers and responsible tax advice by tax professionals. It is not a game of hide and seek with the IRS."




Trackback URL for this entry: http://www.centa.com/trackback.php/20060818142051461

No trackback comments for this entry.