Grant Thornton Falls Foul Of IRS Tax Shelter Probe

by Mike Godfrey, for Law AndTax-News.com, Washington

18 September 2003

The Internal Revenue Service revealed this week that the federal government has initiated proceedings against accounting firm Grant Thornton, as part of its drive to clamp down on the selling of tax shelters.

According to the IRS, the Department of Justice has filed a petition in US District Court in Washington to enforce a summons which was issued as part of an investigation into whether tax shelter registration regulations were being complied with.

IRS Commissioner Mark Everson announced in a statement that: "Lawyers and accountants have a clear and established obligation to comply with the law requiring registration of tax shelters. We will resort to summons enforcement where necessary to compel compliance."

However, a spokesman from Grant Thornton revealed that the summons came as a "total surprise" to the accounting firm, which maintains that it is not in any way engaged in the promotion of abusive tax shelters, and is "disappointed" with the government's decision.

"We have fully cooperated with the IRS, having provided thousands of pages of documents in response to over 40 summonses from the IRS," the spokesman explained, adding that the "IRS has taken the extraordinary step of proceeding with a summons enforcement action without discussing the matter with us first or otherwise giving us advance notice."

It is the sixth time the IRS has gone to court to enforce a summons against the promotion of tax shelters, and some high profile accounting and law firms have fallen foul of the Revenue's campaign to stamp out abusive tax shelter schemes.

IRS rules state that promoters of tax shelters must register transactions and keep records of taxpayers utilizing those transactions, ready for inspection at the Revenue's request.

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