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PricewaterhouseCoopers Agrees to Pay IRS Penalty

June 28, 2002|From Bloomberg News

WASHINGTON -- PricewaterhouseCoopers, the largest accounting firm, agreed Thursday to make a "substantial payment" to the Internal Revenue Service for promoting abusive tax shelters and will tell the tax collector about clients who used them.

The firm, which didn't admit wrongdoing or legal liability, will pay the undisclosed amount for advising clients on tax shelters since 1995.

Pricewaterhouse also agreed to provide "certain client information" and to work with the IRS on developing ways to ensure compliance with rules on tax shelter registrations and lists of investors using such shelters, the agency said.

Pricewaterhouse declined to specify the size of the IRS payment.

"In the context of PricewaterhouseCoopers, this is not substantial," spokesman David Nestor said, declining to comment further.

The company has annual sales of about $9 billion.

It was the second time in a year that a tax shelter promoter agreed to pay a penalty. In August, Merrill Lynch & Co. agreed to pay a "substantial" fine for promoting a tax shelter in the 1980s and 1990s.

Nestor and IRS spokesman Bruce Friedland declined to describe the tax advice the agency found objectionable.

Pricewaterhouse said it agreed to resolve the case "after considering the disruption that the receipt of broad-based summonses currently being issued by the IRS to other tax advisors would cause for our clients, the possibility of a protracted dispute with the service and the hazards of potential litigation.

"The costs of continuing to dispute these issues with the IRS far exceed the costs of settlement," the statement said.

Financial scandals at several corporations, including Enron Corp. and WorldCom Inc. and involving accounting firm Arthur Andersen, have left the accounting industry concerned about its standing with investors and regulators.

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