#389 07-09-02 JUSTICE DEPARTMENT SUES ACCOUNTING FIRMS

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--Boundary_(ID_sriaX3SxDQxcjDg7hYnDgQ)
#389: 07-09-02 JUSTICE DEPARTMENT SUES ACCOUNTING FIRMS KPMG AND BDO =
SEIDMAN TO OBTAIN DISCLOSURE OF TAX SHELTERSIt 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
 =20
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      FOR IMMEDIATE RELEASE
      TUESDAY, JULY 9, 2002
      WWW.USDOJ.GOV=20
     TAX
      (202) 514-2007
      TDD (202) 514-1888
    =20
JUSTICE DEPARTMENT SUES ACCOUNTING FIRMS KPMG AND=20
BDO SEIDMAN TO OBTAIN DISCLOSURE OF TAX SHELTERS
WASHINGTON, D.C. =96 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.=20
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.=20
"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."=20
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.=20
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.=20
"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."=20
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02-389
--Boundary_(ID_sriaX3SxDQxcjDg7hYnDgQ)
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