Saturday 02 March 20
- Banks and Finance
Ernst & Young to pay $123m to settle US tax shelter probe
Ernst & Young has agreed to pay $123m to resolve a US federal
investigation into its role developing and marketing tax shelters that helped
its clients avoid more than $2bn in tax liabilities.
The settlement amount reflects
the gross fees Ernst & Young earned developing and marketing four tax
shelter products from 1999 to 2004 Photo:
9:27PM GMT 01 Mar 2013
As part of the settlement, announced by the Manhattan US Attorney's Office,
the accounting firm also entered into a non-prosecution agreement and admitted
to the wrongful conduct of certain partners and employees.
The settlement amount reflects the gross fees Ernst & Young earned
developing and marketing four tax shelter products from 1999 to 2004, according
to the nonprosecution agreement.
The accord will resolve a longstanding federal investigation that has already
netted other accounting firms accused of selling tax shelters that generated
phony losses for well-off clients.
Ernst rival KPMG avoided indictment in 2005 over its sale of tax shelters,
agreeing to a $456m settlement. In June 2012, accounting firm BDO USA agreed to
a $50m settlement over similar allegations.
In a statement, Ernst & Young said it disbanded in 2003 the group that
put together the tax shelter services, Reuters reported.
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That year, Ernst agreed to pay a $15m settlement to the Internal Revenue
Service over the group's promotion of the shelters. Ernst has been cooperating
with the Justice Department's investigation since 2004, the nonprosecution
"Ernst & Young is pleased to put this matter from a decade ago behind
us," the firm said.
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