A 2004 e-mail could come back to haunt the Internal Revenue Service in its case against 16 former KPMG executives accused of selling questionably legal tax shelters.
The e-mail, which was read aloud to the New York Times over a phone call, says KPMG might not have to register certain tax shelters with the agency, including the so-called Blips shelter at the heart of the government's case.
The e-mail message, written by IRS attorney Roland Barral, is dated in May 2004 and addressed to the head of the agency's large- and midsized- business division, Deborah M. Nolan, and the former head of the agency's office of professional responsibility, Cono R. Namorato.
The message alludes to a debate within the agency over whether KPMB should be required to register certain shelters, including Blips, and makes reference to an internal analysis of the issue that was not available to the press.
Defense lawyers are expected to cite the document -- which was uncovered in preparation for the January trial of the 16 former KPMG executives, an outside lawyer and an investment adviser accused of defrauding the IRS -- in motions seeking the dismissal of a fraud indictment.
The registration requirements are intended to help the IRS combat abusive tax shelters by requiring their makers to register them with the agency, which then typically denies their deductions.
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