BDO Ordered to Give Tax Shelter Records to IRS
The Internal Revenue Service has been given clearance by a federal judge to obtain tax shelter records and related client lists from accounting firm BDO Seidman.
Last July, the Justice Department had filed suit against both KPMG and BDO Seidman in an attempt to gain access to documents and client lists relating to tax shelters sold by the firms.
The IRS will presumably use the lists of BDO clients participating in tax shelters as a starting point for choosing audit victims. Clients found guilty of participating in illegal shelters will be subjected to back taxes, along with related interest and penalties. The accounting firm also faces potential penalties if it is determined that the tax shelters sold by the firm are abusive.
IRS Commissioner Charles O. Rossotti has complained about accountants who sell potentially abusive tax shelters to clients. "It is unacceptable for those holding themselves out as tax professionals providing legitimate tax advice to refuse to comply with legal disclosure requirements. It is not a game of hide and seek with the IRS."
The current court action sets the stage for the IRS to obtain similar clearances from KPMG and Andersen, two other firms currently under investigation. The IRS has also sent approximately 70 summonses to the Justice Department for similar records from other accounting firms.