The big fines just keep on comin’ as the Internal Revenue Service cracks down on abusive tax shelters. This time, a U.S. law firm shells out millions.
By Darrin T.Mish
That’s how much the law firm of Sidley Austin, the successor firm of the merger in 2001 between Sidley & Austin and Brown & Wood, will pay in penalties for promoting abusive tax shelters and failing to comply with tax shelter registration requirements.
‘Sidley Austin has paid a significant penalty for its role in promoting abusive tax shelters,’ IRS Acting Commissioner Kevin M. Brown said in a statement. ‘The firm has also taken concrete steps to prevent a recurrence of this behavior in the future, which they have agreed to maintain going forward. We appreciate their actions and their cooperation in our ongoing investigations.’
The firm issued opinions in connection with potentially abusive tax shelters to more than 700 high-net-worth individuals and corporations. Some of the packages marketed to these individuals included listed transactions such as BOSS (Bond & Option Sale Strategy), variants of the so-called ‘Son of BOSS’ shelter that went by names of COBRA (Currency Options Bring Reward Alternatives), BLIPS (Bond Linked Issue Premium Structure) and COINS (Currency Option Investment Strategy), and others that went by the names of FLIP (Foreign Leveraged Investment Program), OPIS (Offshore Portfolio Investment Strategy) and POPS (Partnership Option Portfolio Securities).
The firm also issued tax opinions in connection with certain potentially abusive non-listed transactions involving distressed assets, bond and equity strips and lease strips.
The multimillion-dollar fine against Sidley Austin isn’t the first victory for the IRS and federal law enforcement agents in a war against tax shelters.
Earlier this year, federal authorities effectively shut down the law firm Jenkens & Gilchrist for criminal tax violations arising from J&G’s tax shelter activities.
As part of a non-prosecution agreement, J&G admitted it developed and marketed fraudulent tax shelters and issued fraudulent opinion letters, resulting in a tax loss to the United States of millions.
‘While it is unfortunate that the 56-year-old national firm of Jenkens & Gilchrist is terminating its legal practice, this should be a lesson to all tax professionals that they must not aid or abet tax evasion by clients or promote potentially abusive or illegal tax shelters, or ignore their responsibilities to register or disclose tax shelters,’ IRS Commissioner Mark W. Everson said in a statement at the time. ‘Pursuing abusive tax shelters is a top priority for the IRS.’s
The IRS estimated that 1,400 investors took advice from J&G tax attorneys and could owe interest and penalties.
It’s unclear how many people took advice from Sidley Austin. But it’s evident that the IRS is cracking down vigorously on tax cheats, particularly those who use abusive tax shelters.
If you’re one of the tax cheats, time is running out.
Darrin T. Mish is a Nationally recognized Attorney whose practice focuses onrepresenting clients across the United States with IRS Problems.He is AV rated by Martindale-Hubbel and is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. He has been honored by a listing in Martindale-Hubbel’s Bar Register of Preeminent Lawyers. If you have an IRS Problem and need IRS help then contact him immediately. He can be reached at his website at http://www.getIRShelp.com or tollfree at (888) 438-6474.