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Abstract: 

The Senate Permanent Subcommittee on Investigations has released another tax shelter report, The Role of Professional Firms in the U.S. Tax Shelter Industry (“Tax Shelter Industry Report”),1 including much that has been described in previous reports,2 but broadening the net to include some players who had received scant mention before. Thus, in addition to raking KPMG LLP over the coals, Ernst & Young and PricewaterhouseCoopers LLP take some hits, and in addition to Sidley Austin Brown & Wood, the law firm of Sutherland, Asbill & Brennan receives unwelcome attention. Brown & Wood, which subsequently merged with Sidley & Austin, “estimates that the firm received $3,418, 290 in fees from FLIP, $6,427,637 from OPIS, and $13,286,790 from BLIPS for a grand total of more than $23 million.” 3 Sutherland, however, was not involved in the creation or marketing of the shelters, or in providing opinion letters, but in representing taxpayers accused by the IRS of buying illegal tax shelters. Banks coming under fire include Deutsche Bank, HVB Bank, UBS Bank, and First Union National Bank. Investment advisors are mentioned, and charitable organizations including the Los Angeles Department of Fire and Police Pensions and the Austin Fire Fighters Relief and Retirement Fund are found to have been counterparties to the “highly questionable tax shelter known as SC2” in return for substantial future payments.4 The Report accepts estimates that the tax shelter industry produced tax losses of around $85 billion.5

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