Tax Shelter Promotion Fallout Continues
Years after the crackdown on the marketing of what the IRS terms “fraudulent tax shelters” began, tax professionals are still taking a hit for their roles in the scandals. This, despite a disappointing prosecution in the KPMG case. The US Attorneys Offices are still pursuing claims against other big name firms - the latest? Arnold & Porter.
A former Arnold & Porter tax partner, Peter Cinquegrani, has pleaded guilty to charges that he marketed fraudulent tax shelters. The charges included conspiracy to commit tax fraud, aiding and abetting tax evasion, and aiding in the submission of false and fraudulent documents to the Internal Revenue Service. Cinquegrani allegedly prepared draft opinions on the legality of fraudulent tax shelters for high net worth Ernst & Young clients, even though the shelters were not legal.
Cinquegrani will be sentenced in December. He could be sentenced to up to eight years in federal prison for his role in the scandal.
His former firm, Arnold & Porter, didn’t get off easy either. They have agreed to pay the IRS an undisclosed amount as a penalty for promoting the tax shelters. Their biggest penalty, however, is the stain associated with the firm as a result.
