Last week, the IRS announced a closing agreement with Ernst & Young resolving issues relating to the IRS examination of E&Y’s compliance with the registration and list maintenance requirements of the firm’s marketing of tax shelters.
Under the agreement, E&Y will make a non-deductible payment of $15 million. It also agreed to work with the IRS to ensure ongoing compliance with the registration and list maintenance requirements, which includes allowing the IRS, upon its request, to review documents prepared as part of E&Y' New Quality and Integrity Program. The closing agreement also had a disclosure authorization that allowed the IRS to issue a news release with details of the agreement.
IRS Commissioner Mark Everson was conciliatory. "We are pleased that Ernst & Young has cooperated fully with the IRS in resolving these matters …. This represents a real breakthrough and is a good working model for agreements with practitioners."
As reported on WebCPA's Newswire, Mark Weinberger, vice chair of Americas Tax Services for E&Y, said the firm was also pleased with the outcome. '“The settlement underscores our commitment to having a good working relationship with the IRS and complements the initiatives we have put in place to ensure the quality and integrity of our tax practice."
I am surprised that the two of them didn't announce the settlement on the steps of the Treasury Department followed by a celebratory drink at the local karaoke bar where they could have together sung "Why Can't We Be Friends?"
E&Y would be very happy to get this dispute with the IRS over with and Allan Koltin indicates, on WebCPA, E&Y are probably getting off cheap if $15 million accomplishes that.
What I find so amazing is the fact that the Big Four continue to pay millions out in settlements and then issue statements that seem to indicate nothing was wrong, and the future is rosy. I think I am finally beginning to understand the Big Four. They continue to do things that most other accounting firms would never think of doing and when confronted with negative publicity, pay to have it go away.
