Blaming delays in information sharing, as well as a battle over who will pick up the tab for legal fees, the trial over former KPMG partners' sales of questionably legal tax shelters won't begin until Jan. 15.

Judge Lewis Kaplan of Manhattan Federal District Court had originally scheduled the trial's start date for Sept. 11. Sixteen former partners at the Big Four firm are accused of selling the improper shelters; a New York federal grand jury charged each of the defendants with at least 39 counts of tax evasion and a single count of conspiracy to defraud the Internal Revenue Service in the fall of 2005.

Kaplan's top reason for delaying the trial was the government's failure to hand over certain documents to the defendants' lawyers by an October 2005 deadline -- some of those files were just turned over this month, after Kaplan threatened to impose sanctions if the material was not turned over by Nov. 15.

"Quite apart from the question whether some of the government's failures are culpable and deserving of sanctions, defendants justifiably argue that the extent of the belated production has been so large that they simply need more time to make sense out of it," Kaplan wrote.

Kaplan has already publicly questioned KPMG's decision to cap the amount of the legal fees it covers for the former partners, saying that the firm has regularly paid all costs for its employees in similar situations and urging the workers to file a suit.

In January 2004, KPMG announced congressional scrutiny into its past shelter activities after a November 2003 report compiled by a Senate Government Affairs Subcommittee showed that KPMG collected roughly $124 million in fees from shelters from 1997 through 2001. Investigators have said that the shelters may have cost the government more than $2.5 billion in tax revenue. In August 2005, the firm agreed to pay $456 million to avoid prosecution over its sale of abusive tax shelters

Previously on WebCPA:

Former KPMG Partners Sue for Fees (July 13, 2006)

Judge: KPMG Defendants' Court Costs Should Be Covered (June 28, 2006)

More KPMG Execs Indicted over Shelters (Oct. 19, 2005)

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