The Texas State Board of Public Accountancy has stayed its license suspension of KPMG LLP in connection with the Big Four firm's sales of questionably legal tax shelters.In a consent order, KPMG's license was suspended for five years - although the stay order means that it will be on probation for the three years. Penalties were issued on 96 violations of the state's Public Accountancy Act at $1,000 each, the maximum allowed under Texas law at the time of the violations. KPMG also had to pay $3,842.45 in administrative costs.
The board's action is based on admissions that KPMG made in a deferred prosecution agreement with the U.S. Department of Justice in August 2005, concerning its tax shelter activity between 1996 and 2002. KPMG admitted that through the actions of former partners and employees it prepared fraudulent tax returns for clients; drafted false statements to support the tax shelters; issued opinions that were false; concealed the tax shelters and the facts regarding them from the Internal Revenue Service; failed to locate and produce documents sought by the IRS; and misrepresented to the IRS KPMG's role in creating the tax shelters.
KPMG employs over 400 CPAs in six offices across Texas. If at any time during the probationary period KPMG is convicted of not complying with the terms of the agreement, the firm's license to practice in Texas will be suspended.
