Individuals who were solicited by accounting firms (KPMG, LLP, BDO Seidman and Price Waterhouse Coopers) to purchase tax investment strategies may have legal recourse against the accounting firms, as well as the law firms, investment advisors and banks who assisted in the marketing, sale and implementation of these tax products.

Jim Gilreath has joined with T. English McCutchen of McCutchen Blanton Johnson & Barnette, LLP, an experienced business litigator and Professor John P. Freeman, who has extensive experience in investment-related cases, to pursue claims on behalf of defrauded taxpayers. Together, these Tax Shelter Litigation Attorneys represent over 35 clients who were fraudulently induced into purchasing tax products which have now been deemed to be abusive. We represent clients throughout the United States who have been involved in many of the transactions the IRS has now listed as abusive tax shelter transactions and have amicably resolved a number of these cases.

In the broadest sense, a tax shelter is a device used to reduce or eliminate the tax liability of the taxpayer. Some tax shelters confer specific tax benefits and were explicitly enacted by Congress to advance a legitimate endeavor. Those types of legitimate tax shelters are not the focus of the IRS and the United States Senate's tax shelter investigations. According to published reports, including an extensive report prepared by the United States Senate's Permanent Subcommittee on Investigations (Committee on Government Affairs), KPMG reaped millions of dollars in fees through the sale of tax products it knew or should have known were abusive tax shelters and were not likely to survive IRS scrutiny. Despite having notice of the problems with these products, KPMG, and others, represented to hundreds of clients these tax products were a legitimate means of minimizing tax liability.

To implement the tax strategies, KPMG, and other accounting firms, utilized law firms (Brown & Wood and Jenkins & Gilchrist), investment firms (Presidio, Quadra, QA Investments and Quellos), and banks (First Union and/or Wachovia and Deutsche Bank) to assist in the formation and implementation of these tax shelters. Well-known law firms, working with other promoters, usually provided the taxpayers with opinion letters attesting to the "legality" of the sheltering schemes. The promoters in these schemes received millions of dollars in fees.
The Senate Subcommittee report found KPMG used "aggressive marketing tactics to sell its generic tax products, including by turning tax professionals into tax product salespersons, pressuring its tax professionals to meet revenue targets, using telemarketing to find clients, using confidential client tax data to identify potential buyers, targeting its own audit clients for sales pitches, and using tax opinion letters and insurance policies as marketing tools."

The United States Senate's Permanent Subcommittee on Investigations (Committee on Government Affairs) conducted hearings on November 18 and 20, 2003, concerning the development, sale and implementation of the abusive tax shelters by KPMG and other professional organizations. The Senate Subcommittee focused on four tax shelter products promoted by KPMG: Bond Linked Issue Premium Structure (BLIPS), Foreign Leveraged Investment Program (FLIP), Offshore Portfolio Investment Strategy (OPIS), and the S-Corporation Charitable Contribution Strategy (SC2). KPMG sold these tax products to individuals in the late 1990s until about 2001.

Other tax products currently under attack by the IRS are the Custom Adjustable Rate Debt Structure (CARDS), and the Bond and Option Sales Strategies (commonly referred to as BOSS or Son of BOSS). The CARDS transactions were arranged by Chenery Associates, a California firm. The IRS has prepared a list of abusive tax shelter transactions.

The conduct being investigated by the U.S. Senate has resulted in television coverage on "60 minutes," "Frontline" and other news shows, as well as civil litigation in North Carolina, South Carolina, Florida, Texas and many other states.

If you believe you were sold a tax shelter or investment product such as those described, you may have legal recourse against the individuals and firms who marketed and sold the tax strategy to you or your corporation. For more information about abusive tax shelters or to determine if you have a potential claim against a tax shelter.

The Statute of Limitations will vary from state to state so do not delay. Contact us about this important litigation. Even if a promoter has assured you its lawyers would represent you if there were an audit, please make sure your rights are being protected.

Abusive tax shelter cases involve serious misconduct by the tax shelter promoters and their accomplices. This means it is very important that you have independent, experienced counsel able to protect your interests before the IRS, and in dealing with those involved in the offer and sale of the abusive tax shelter you bought.

If you believe you were sold a tax shelter or investment product such as those described, you may have legal recourse against the individuals and firms who marketed and sold the tax strategy to you or your corporation. For more information about abusive tax shelters or to determine if you have a potential claim against a tax shelter promoter, please contact us today at 864-242-4727 or via our online contact form.