Montvale, N.J. (Dec. 12, 2003) -- KPMG, one of a number of accounting firms under regulatory scrutiny related to the marketing of tax strategies deemed to be abusive, responded to comments by the Department of Justice that accused the firm of thwarting the Internal Revenue Service’s investigation into its tax sheltering activities.

In documents this week in federal court in Washington, the DOJ said KPMG “uses delaying tactics to frustrate the IRS’s examination” and said the firm’s actions "demonstrate a concerted pattern of obstruction and non- compliance, threatening the integrity of the IRS examination process."

“The government's filing is part of a continuing evidentiary dispute between the Department of Justice and KPMG over privilege claims asserted in good faith by KPMG,” a KPMG spokesman told WebCPA. “In fact, in response to the IRS summonses, KPMG has produced more than 680 boxes of documents, comprising more than a million pages, and has cooperated fully with the IRS in making numerous firm witnesses available to it for interviews.”

A Senate subcommittee report released in November reported that tax shelters sold by KPMG cost the Treasury at least $1.4 billion, while netting the firm $124 million. The IRS’s crackdown on tax shelter promoters has resulted in legal action against several firms, including Grant Thornton, BDO Seidman and Ernst & Young, as well as KPMG.

-- Melissa Klein

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