BDO’s US firm has agreed to pay a $50m
settlement to the US tax collector Internal Revenue Service (IRS)
for its part in an illegal tax shelter scheme.
The US Attorney for the Southern District of
New York said BDO admitted to criminal wrongdoing in a tax shelter
scheme that helped wealthy clients in the evasion or attempted
evasion of approximately $1.3bn in taxes.
BDO reached a resolution with the IRS and US
Department of Justice over its involvement in tax shelters between
1997 and 2003.
The firm said the penalty would have “no
impact” on its business operations and client services.
“This is the
latest step in the federal government’s investigations of numerous national accounting, law
and financial services firms, which
began almost ten years ago,” the firm stated. “BDO has co-operated
with the IRS and the United States Attorney’s office and will continue to do so. BDO is
pleased that these matters have been brought to a resolution,” the firm said in its
The US Attorney’s Office said that as part of
the resolution the firm agreed to certain restrictions and controls
on its tax practice as well as having to implement and maintain an
effective compliance and ethics programme.
Manhattan US Attorney Preet Bharara said the
agreement is the “latest successful result in a multi-year effort
to unravel this massive fraud and hold to account those individuals
and entities responsible for depriving the IRS of billions of
dollars in revenue”.
“Tax cheats – be they individuals who file
false returns or businesses that help them carry out their
deception – will not be tolerated,” Bharara said.
BDO’s former chairman and chief executive
Denis Field was indicted in June 2009 for leading the fraud and is
currently awaiting a retrial. Five other BDO partners and/or
principals pled guilty to tax crimes and are awaiting
They were all members of the firm’s Tax
Solution Group, under which the firm and its co-conspirators
allegedly developed, marketed, sold and implemented illegal tax
shelter products targeted to wealthy clients with expected income
or gains exceeding $5m.