Washington (July 3, 2003) -- Ernst & Young has agreed to pay the Internal Revenue Service $15 million to resolve an investigation into its marketing of lucrative tax shelters.
The Internal Revenue Service said the agreement resolves all issues surrounding the firm's registration and listing of tax shelters.
Aside from the non-deductible $15 million payment, E&Y has also agreed to "ensure ongoing compliance with the registration and list maintenance provisions" of the Internal Revenue Code, the IRS added in a statement. The firm will also grant the IRS full access to spot reviews of documents prepared as part of its new Quality and Integrity 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. This represents a real breakthrough and is a good working model for agreements with practitioners."
Mark Weinberger, vice chair of Americas Tax Services for E&Y said the firm was pleased with the outcome.
“The settlement underscores our commitment to having a good working relationship with the IRS and complements the initiatives we have put in place to ensure the quality and integrity of our tax practice. As the IRS indicated, Ernst & Young is implementing a quality and integrity program to ensure the highest standards of practice and ongoing compliance with the law and regulations.”
Industry consultant Allan Koltin said E&Y should be thrilled with the deal. "When you consider that they collected fees well over $100 million from the time period in question, it seems to me that they've come out quite well on this. Both financially and just from a public perception standpoint, they can now get on with their life."
Last year, PricewaterhouseCoopers hammered out a similar deal with the agency, and Koltin said he suspects KPMG -- which has received the most media attention surrounding tax shelters -- is also in settlement talks.
-- Tracey Miller-Segarra
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