IRS Points Finger at Andersen

The Internal Revenue Service has filed a petition in the Chicago federal court to force accounting firm Arthur Andersen LLP to produce documents relating to tax shelters sold by the firm. The IRS claims it has evidence that the shelters produced "likely improper tax deductions" for participants and that those deductions ranged from $10 million to $1.6 billion. The IRS indicated that Andersen may be liable for "promoter penalties" for failing to follow IRS rules with regard to the tax shelters the firm sold to clients.

Earlier this year the IRS served 19 summonses to Andersen requesting information about the shelters. The response received from Andersen was inadequate, according to the IRS, thus the current court action.

Andersen spokesperson Patrick Dorton stated that the firm has been most cooperative with the IRS but still needed to protect its clients. "Our firm provided significant amounts of information already to the IRS," he said. "At the same time we need to balance our client confidentiality obligations."

The IRS is examining tax shelter activity between Andersen and its clients for the period 1995 through 2002. The request for enforced action is part of the IRS's ongoing attempt to seek information about and shut down abusive and improper tax shelters. Accounting firms Ernst & Young, KPMG, and BDO Seidman have been in the news recently for their court battles with the IRS.

You may like these other stories...

OECD calls for coordinated fight against corporate tax avoidanceDavid Jolly of the New York Times reported that dozens of countries with the most advanced economies have agreed on principles for concrete action to prevent...
Plan ahead before you buy some shares in a stock mutual fund near yearend, when the fund is about to pay a dividend. It might be better to wait until after the fund goes "ex-dividend," that is, wait until after the...
AgFeed agrees to pay $18 million to settle SEC accounting fraud caseMichael Rapoport of the Wall Street Journal reported on Monday that AgFeed Industries Inc. has agreed to pay $18 million to settle US Securities and...

Already a member? log in here.

Upcoming CPE Webinars

Sep 18
In this course, Amber Setter will shine the light on different types of leadership behavior- an integral part of everyone's career.
Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
Sep 30
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 23
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.