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August 12, 2005

A former banker for the German bank BHV pleaded guilty yeasterday to tax charges for his role in promoting a KPMG-related tax shelter. Domienick Degiorgio was involved in selling the "BLIPS" tax shelter, which the IRS declared abusive in 2000 (Notice 2000-44).

The New York Times reported yesterday that KPMG is likely to avoid indictment for its role in promoting tax shelters. "Fragile" negotiations are leading towards an agreement that will require KPMG to pay a large fine and establish an independent monitor to keep an eye on the firm, according to the report.

While KPMG struggles to avoid indictment, two plaintiffs firms are battling in federal court over who gets to be the lead firm in a class action against KPMG. While we don't have particular concern for KPMG, watching class-action law firms at battle is sort of like watching the Yankees play the Mets: it's too bad only one team can lose.

LINK: Slide show explaining the BLIPS shelter.

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