Posted on 08/30/2005 6:06:21 AM PDT by OESY
KPMG avoided the fate of Arthur Andersen yesterday... over the marketing and sale of "abusive" tax shelters. But the price of survival was high. The accounting firm will pay $456 million in fines and restitution and has agreed to let a federal monitor look over its shoulder. At the same time, no fewer than eight former KPMG executives and an outside lawyer were indicted on conspiracy charges for designing and selling the shelters....
KPMG will survive this "deferred prosecution" by admitting wrongdoing. But it's easy to forget amid the righteous indignation over tax shelters with names like FLIP, BLIP, OPIS and SC2 that the legality of these tax-avoidance techniques has never really been tested. The IRS banned each of them in the late 1990s or early 2000s, but no court has ruled on their propriety.
KPMG maintained for years that the shelters were legitimate, and yesterday's plea is as much the product of a legal strategy designed to avoid the corporate death sentence....
The IRS's standard in evaluating tax shelters is whether the transaction serves a "legitimate economic purpose," or is crafted entirely to avoid taxes. Senators Carl Levin (D., Mich.) and Norm Coleman (R., Minn.) have proposed legislation that would enshrine that doctrine in law.
Speaking on the Senate floor last month, Mr. Levin described the distinction: "Abusive tax shelters are very different from legitimate tax shelters, such as deducting the interest paid on home mortgage or Congressionally approved tax deductions for building affordable housing. Abusive tax shelters are complicated transactions promoted to provide large tax benefits unintended by the tax code" (our emphasis). In other words, it's OK to avoid taxes in any of the myriad ways Congress approves of. It's abusive if Congress didn't intend it -- assuming anyone can ever figure out what Congress really intends....
(Excerpt) Read more at online.wsj.com ...
FLAT TAX NOW~!!!!!!! no deductions, no tax shelters, no loopholes
The income tax code could be replaced with one paragraph.
I believe Anderson was ultimately found to be not guilty.
The reason this has been going on for years is the TAX CODE is so damn complex even the IRS is not sure what is a legitimate deduction. All the more reason for the Fair Tax or the Flat Tax.
PS
Ted Kennedy has come up with shortest tax code ever proposed. It is only eight short words. "How much did you make? Send it in."
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