IRS Reaches Tax Shelter Settlement With Arnold & Porter

The IRS yesterday announced (IR-2008-104) that it has reached a settlement with Arnold & Porter (Washington, D.C.), which has paid a civil tax shelter promoter penalty:

The settlement relates to the Firm’s failure in 2000, 2001 and 2002 to comply with tax shelter registration requirements and its participation in the organization of the following listed transactions that were sold to high-net worth individuals and corporations: Partnership Option Portfolio Securities (POPS), Personal Investment Corporation (PICO), and Family Office Customized Partnerships (FOCUS). The Firm cooperated with the IRS’s examination. The Firm has put into place a comprehensive compliance program designed to assure ongoing adherence to all tax shelter disclosure and list maintenance requirements of the Internal Revenue Code, and related laws.

Also yesterday, Peter Cinquegrani, a former partner of Arnold & Porter, pled guilty to conspiring to commit tax fraud and tax evasion on behalf of wealthy clients.  From Reuters:

[He] admitted in U.S. District Court in Manhattan that from 1998 to 2001 he and others, including employees of the accounting firm Ernst & Young, developed a tax shelter and created a legal opinion they would use to support it. Cinquegrani also admitted that in 2003 he lied under oath to the U.S. Internal Revenue Service when he was asked about the tax shelter.

See also ABA Journal, New York Law Journal.