Washington (Sept. 18, 2003) -- The Justice Department Wednesday widened its probe of tax shelters sold by accounting firms to include second-tier firm Grant Thornton.
The Justice Department on Wednesday asked a federal court to enforce summonses issued to Grant Thornton regarding an Internal Revenue Service tax shelter investigation of the accounting firm, in order to, in part, "obtain information necessary to combat the sale and use of abusive tax avoidance transactions."
The Justice Department's tax division, acting for the Internal Revenue Service, asked a U.S. District Court in the District of Columbia to enforce nine administrative summonses issued to Grant Thornton.
Grant Thornton said the summonses were a "complete surprise," adding that it has already turned over thousands of pages of documents in response to earlier summonses from the agency.
The summonses seek information about Grant Thornton's compliance with tax shelter registration and list maintenance requirements. This includes identifying taxpayers who may have invested in tax shelters organized and sold by the firm.
IRS Commissioner Mark Everson issued a statement saying that the court action is part of an IRS push to halt tax shelter promoters.
"Lawyers and accountants have a clear and established obligation to comply with the law requiring registration of tax shelters," Everson's statement said. "We will resort to summons enforcement where necessary to compel compliance."
In a statement, Grant Thornton said it has complied with every request made to the firm regarding tax shelters.
"The filing of this summons enforcement action involving nine summonses comes as a total surprise to us, as we were given no advance notice that the matter was referred for summons enforcement. We have fully cooperated with the IRS, having provided thousands of pages of documents in response to over 40 summonses from the IRS. We were not engaged in the promotion of abusive tax shelters and are disappointed that the IRS has taken the extraordinary step of proceeding with a summons enforcement action without discussing the matter with us first or otherwise giving us advance notice."
The IRS has gone to court five previous times to get the names of customers, promoters and tax shelter products pushed by accountants, law firms and others. Legal proceedings have involved BDO Seidman, the former Arthur Andersen, KPMG LLP, the Dallas-based law firm of Jenkens and Gilchrist, and a New York company called Diversified Group Inc.
-- WebCPA staff
