When will these firms ever learn? Accounting firm BDO USA has admitted to criminal wrongdoing and settled to pay $50 million for fraudulent tax shelters. The Chicago based accounting firm will avoid prosecution for implementing false financial transactions that amounted to at least $6.5 billion in tax losses. Between 1997 and 2003, BDO helped wealthy Americans evade $1.3 billion in taxes which are now coming back to bite these people. Many clients have paid their back taxes and penalties to avoid any criminal tax prosecution.
“Today’s agreement is the latest successful result in a multiyear effort to unravel this massive fraud and hold to account those individuals and entities responsible for depriving the IRS of billions of dollars in revenue,” Manhattan U.S. Attorney Preet Bharara said in a statement. “Tax cheats — be they individuals who file false returns or businesses that help them carry out their deception — will not be tolerated.”
The investigation began when the U.S. attorney’s office made an inquiry into law firm Jenkens & Gilchrist, whose lawyers wrote legal opinions for wealthy clients. Their opinions essentially approved the tax shelters these clients were using. Chicago tax lawyer Paul Daugerdas, helped develop these tax shelters and worked with BDO to help market them. CEO of BDO, Denis Field, helped to aggressively market these tax shelters which helped account for $420 million in revenue in 2002.
BDO employed different techniques to further their illegal tax shelter marketing. By writing fraudulent legal opinion letters and filing false tax returns, the IRS finally realized their wrongdoings.
The BDO settlement is one of many government crackdowns on bankers, lawyers, and account ntants who participated or aided in tax evasion. Big firms like KPMG and Deutsche Bank have already agreed to pay massive penalties to avoid charges.
BDO has agreed to continue cooperating with the investigation to ensure all the charges will be dropped in six months. However, the accounting firm must pay $34.4 million in penalties to the IRS by April 1, 2018 and forfeit $15.6 million in eight annual payments starting May 1, 2018.
JDKatz, P.C. is a full-service law firm focused on tax law and estate planning. We are dedicated to minimizing your existing liability and risks while providing valuable tax planning to streamline your tax issues in the future. Please call us at 301-913-2948 to schedule an appointment to meet with one of our trusted attorneys.