Greenville Abusive Tax Shelter Lawyers

Representing Victims of Tax Shelter Fraud

Individuals who were solicited by accounting firms (KPMG, BDO Seidman and Price Waterhouse Coopers) to purchase tax investment strategies may have legal recourse against the accounting firms, as well as the law firms, investment advisors and banks who assisted in the marketing, sale and implementation of these tax products.

Attorney Jim Gilreath, in association with other tax shelter litigation attorneys, has been on the leading edge of this tax shelter litigation, filing the second case in the nation against KPMG in 2003. In 2006, he was co-counsel with a group of plaintiffs' lawyers who filed a class action against KPMG and other financial entities. The class action was settled and approved by a Federal District Judge in New Jersey for approximately 178.5 million.

He has since represented more than 35 clients who were fraudulently induced into purchasing tax products, later deemed to be abusive tax shelters. We have represented clients throughout the United States who were involved in many of the transactions the IRS has now listed as abusive tax shelter transactions, and have amicably resolved most of these cases.

For more information about abusive tax shelters or to determine if you have a potential claim against a tax shelter, please review the information below and contact our law firm.

What Is an Abusive Tax Shelter?

In the broadest sense, a tax shelter is a device used to reduce or eliminate the tax liability of the taxpayer. Some tax shelters confer specific tax benefits and were explicitly enacted by Congress to advance a legitimate endeavor. Those types of legitimate tax shelters are not the focus of the IRS and the United States Senate's tax shelter investigations.

Abusive tax shelter cases involve serious misconduct by the tax shelter promoters and their accomplices.

What Did KPMG Do Wrong?

According to an extensive report prepared by the United States Senate's Permanent Subcommittee on Investigations (Committee on Government Affairs), KPMG reaped millions of dollars in fees through the sale of tax products it knew or should have known were abusive tax shelters and were not likely to survive IRS scrutiny. Despite having notice of the problems with these products, KPMG, and others, represented to hundreds of clients that these tax products were a legitimate means of minimizing tax liability.

Who Else Was Involved?

To implement the tax strategies, KPMG and other accounting firms, utilized law firms (Brown & Wood and Jenkins & Gilchrist), investment firms (Presidio, Quadra, QA Investments and Quellos), and banks (First Union and/or Wachovia and Deutsche Bank) to assist in the formation and implementation of these tax shelters. Well-known law firms, working with other promoters, usually provided the taxpayers with opinion letters attesting to the "legality" of the sheltering schemes. The promoters in these schemes received millions of dollars in fees.

What Aggressive Marketing Tactics Were Used?

The Senate Subcommittee report found KPMG used "aggressive marketing tactics" to sell its generic tax products, including:

  • Turning tax professionals into tax product salespersons
  • Pressuring its tax professionals to meet revenue targets
  • Using telemarketing to find clients
  • Using confidential client tax data to identify potential buyers
  • Targeting its own audit clients for sales pitches
  • Using tax opinion letters and insurance policies as marketing tools

The United States Senate's Permanent Subcommittee on Investigations (Committee on Government Affairs) conducted hearings on November 18 and 20, 2003, concerning the development, sale and implementation of the abusive tax shelters by KPMG and other professional organizations. The Senate Subcommittee focused on four tax shelter products promoted by KPMG:

  • Bond Linked Issue Premium Structure (BLIPS)
  • Foreign Leveraged Investment Program (FLIP)
  • Offshore Portfolio Investment Strategy (OPIS)
  • S Corporation Charitable Contribution Strategy (SC2)

KPMG sold these tax products to individuals from the late 1990s until about 2001.

Other tax products currently under attack by the IRS are the Custom Adjustable Rate Debt Structure (CARDS), and the Bond and Option Sales Strategies (commonly referred to as BOSS or Son of BOSS). The CARDS transactions were arranged by Chenery Associates, a California firm. The IRS has prepared a list of abusive tax shelter transactions.

The conduct being investigated by the U.S. Senate resulted in television coverage on "60 Minutes," "Frontline" and other news shows, as well as civil litigation in North Carolina, South Carolina, Florida, Texas and many other states.

Do You Have a Case?

If you believe you were sold a tax shelter or investment product such as those described, you may have legal recourse against the individuals and firms who marketed and sold the tax strategy to you or your corporation.

The Statute of Limitations will vary from state to state so do not delay. Contact us about this important litigation. Even if a promoter has assured you its lawyers would represent you if there were an audit, please make sure your rights are being protected.

Why Choose Us?

Abusive tax shelter cases are extremely complex. This means it is very important that you have independent, experienced counsel able to protect your interests before the IRS, and in dealing with those involved in the offer and sale of the abusive tax shelter purchased.

For more information about abusive tax shelters or to determine if you have a potential claim against a tax shelter promoter, please contact the lawyers of the Gilreath Law Firm, P.A., in Greenville, South Carolina.

Learn more: Visit our FAQ page on abusive tax shelters.

The information contained in this site is provided as a public service for informational purposes only and is not intended to be a comprehensive statement of the law or, in particular, to contain legal advice. Laws vary from state to state and are subject to change, which could affect the information available on this site. If you have questions regarding any information found on this site, you should consult an attorney who can investigate the particular circumstances of your situation. Persons receiving information found on this site should not act on this information without receiving professional legal counsel. Use of and access to this web site does not create an attorney client relationship between the Gilreath Law Firm, P.A. and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney. Any result achieved on behalf of clients in other matters does not necessarily indicate similar results can be obtained for other clients.