Ernst & Young In $15 Million Settlement With IRS

by Leroy Baker, Tax-News.com, New York

04 July 2003

The Internal Revenue Service has revealed this week that accounting giant Ernst & Young has agreed to settle a tax shelter investigation with a payment of $15 million.

The case relates to the revenue's probing of a tax shelter that E&Y marketed to former Sprint chairman William Esrey, who resigned when he reportedly revealed in an email last February that an IRS investigation into the tax shelter would decimate his wealth.

A recent statement from the accounting firm said that the settlement "underscores our commitment to having a good working relationship with the IRS and complements the initiatives we have put in place to ensure the quality and integrity of our tax practice."

In addition, the IRS has revealed that "Ernst & Young has agreed to work with the IRS to ensure ongoing compliance with the registration and list maintenance provisions of the Internal Revenue Code and regulations."

“We are pleased that Ernst & Young has cooperated fully with the IRS in resolving these matters,” IRS Commissioner Mark W. Everson commented. “In particular, the ability of the IRS to review the firm’s compliance on an ongoing basis will help to reduce the likelihood of future violations of the registration and list maintenance requirements. This represents a real breakthrough and is a good working model for agreements with practitioners,” he added.

The IRS currently has a further 90 case files open regarding professional service firms.

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