Senate investigators to review accounting firm's tax shelters
Monday, November 17, 2003
WASHINGTON -- One of the largest U.S. accounting firms promoted dubious charitable deductions and complicated transactions to generate phony paper losses for clients, say Senate investigators who spent a year unwinding four tax products that KPMG sold to more than 350 individuals in the late 1990s and early 2000s.
The firm says it no longer offers the tax strategies.
The four shelters once sold by KPMG will be scrutinized this week during two days of hearings of the Senate Governmental Affairs investigations subcommittee.
Tuesday's testimony is to give an inside look at tax-shelter development and marketing. Thursday's aims to reveal roles played by other financial institutions that support and enable tax sheltering.
Subcommittee aides, who handled the project with the help of anonymous whistle-blowers inside KPMG, said the transactions had virtually no business purpose other than to reduce taxes for individuals who used them.
The Internal Revenue Service ruled in 2000 that the basis for three of the four transactions make them potentially abusive shelters. The fourth, subcommittee aides said, is under investigation by the IRS.
In a written statement, KPMG said the strategies "represent an earlier time at KPMG and a far different regulatory and marketplace environment. None of the strategies -- nor anything like these tax strategies -- is currently being offered by KPMG."