Taxable Talk

The other shoe dropped on KPMG today. According to this story, KPMG will pay a fine of $456 million, accept an outside auditor, and shut down its tax practice for high net-worth individuals within six months. Additionally, seven former partners were indicted.

You can find full roundups on this story at Roth & Company Tax Updates and the TaxProf Blog.

Pity Mark Steven Miller, former CEO of Oakwood Deposit Bank in Ohio. Mr. Miller was convicted of fraud in 2003 for embezzling $49 million from his bank. He then took his profits and invested them in the Star Dancer Casino Boats—boats that sailed from Florida ports and offered casino games. Little did the bozo know that the owners of Star Dancer allegedly took the money they withheld from their employees and spent it rather than forward it to the IRS. The government apparently stumbled upon the second scam from the investigation of the initial embezzlement. The two owners of Star Dancer each face fines of $10,000 and five years imprisonment.

Links :Myrtle Beach Sun News and Toledo Blade

According to this story by Reuters, KMPG will face a fine of just under half a billion dollars. This story notes that eight former executives will be indicted.. However, KMPG will sign a "deferred prosecution" agreement so that the firm will not follow Arthur Andersen into the scrap heap of accounting history.

However, KPMG faces a host of lawsuits over the cause of their problems: tax shelters that have been found by the IRS to not be legal. The "BLIPS" tax shelter, sold to 186 wealthy individuals, was found by the IRS to not be a legal tax shelter. While it brought profits to KPMG during the years it was being sold, I'm sure KPMG regrets it ever being offered.