A KPMG tax shelter that the Internal Revenue Service last year declared abusive snared a group of prominent American companies, reflecting the popularity of efforts to reduce corporate taxes has become. Here are earlier posts on KPMG’s mounting problems relating to promotion of such tax shelters. The highly aggressive shelter that KPMG promoted was called the “contested liability acceleration strategy,” or CLAS, and it has been estimated that the promotion of the shelter generated $20 million in fees for the firm..
This Wall Street Journal ($) article reports that the IRS contends tht the KPMG promoted shelter generated at least $1.7 billion in tax savings for more than 25 companies. Delta Air Lines, Whirlpool Corp., Clear Channel Communications Inc., WorldCom Inc., Tenet Healthcare Corp. and the U.S. units of AstraZeneca PLC and Fresenius Medical Care AG all bought the shelter. Apparently, several other prominent companies signed agreements to buy the shelter, but it was unclear whether those companies actually implemented it.
A federal grand jury in Manhattan is currently investigating KPMG‘s past tax-shelter activities. At this point, it’s not known what penalties the IRS will seek from KPMG in connection with CLAS or other past shelter sales.