…Unlike Jenkens Gilchrist, which folded after being hit with penalties related to tax advice involving tax shelters that the Internal Revenue Service found to be abusive.
The IRS announced today that it has reached a settlement with the law firm of Sidley Austin LLP, the successor firm of the 2001 merger between Sidley & Austin and Brown & Wood LLP (though the name change was in 2006). Sidley agreed to a civil tax shelter promoter penalty of $39.4 million for its promotion of abusive tax shelters and a failure to comply with tax shelter registration requirements. According to the IRS, at least one attorney at Sidley issued opinions in connection with potentially abusive tax shelters. Some of the packages were BOSS (Bond & Option Sale Strategy) and 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).
Also on today, Michael Garcia, the US Attorney for the District of New York, announced that he would not file criminal charges against Sidley. The decision was based largely on Sidley’s ongoing cooperation with the IRS in their investigation, the fact that Sidley did not mass market the shelters and that the purveyor of the schemes, Raymond Ruble, who was ultimately fired by Sidley, acted in a deceptive manner and without Sidley’s blessing. Ruble is currently awaiting trial with eight other defendants (each of whom is a former KPMG employee, other than Ruble) for conspiracy to defraud the IRS and various tax evasion offenses; the case is U.S. v. Stein.
