Pretty depressing Monday morning when you find out that a very well respected tax lawyer, formerly from Ernst and Young (“E&Y”) no less, is off to jail.
This would be the 3rd person in my outlook contacts folder heading off to a federal penitentiary for various white collar crimes this year.
Why a post? I am going to quote from the TaxGirl blog (http://www.taxgirl.com/ernst-young-partners-found-guilty-on-all-counts/) from where I got the story. I clicked through to the story from my email thinking I was going to see interesting stuff about E&Y – not a favorite of mine for various reasons.
Here is the quote from TaxGirl:
As part of their scheme, Coplan, Nissenbaum, Shapiro and Vaughn helped clients manufacture losses within the tax shelters. The four then solicited opinion letters from law firms that claimed that the tax shelter losses or deductions would “more likely than not” survive IRS challenge, or “should” survive IRS challenge. The IRS claimed that the four defendants were aware that the transactions did not meet those standards.
As I read this paragraph closely, it dawned on me that these former E&Y guys, all headed to the big house, relied on the age-old idiocy of the vaunted law firm opinion letter to justify their tax fraud schemes.
In other words, a letter from a law firm backing up some questionable tax avoidance scheme is absolutely worthless.
Why I am reporting this to the nonprofit world is that this is the typical proof of one of those newfangled get rich quick charitable schemes out there. It usually involves insurance, your donors lives, etc.. And, they always have a letter from a law firm explaining that the scheme is fine.
Well, the only letter that counts is a letter from the IRS – a private letter ruling. Period. Never be fooled by any promoter, of any scheme that is any bit questionable or risky, with one of these law firm letters. It doesn’t matter which law firm. They are all garbage and if the promoters really feel that they have a worthwhile plan, they should go to the IRS for their opinion.
This is just a pet peeve of mine since I have had to sit through so many garbage meetings and presentations on such ridiculous plans. And, the next time one those idiots shows me an official law firm blessing letter, I am going to pull out this case and shove it down their throats (not literally, of course).
Maybe this week will get better, please G-d!