TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Sunday, August 28, 2005

VanDenburgh & Harmelink on Individual Accountability for Tax Shelters


William M. VanDenburgh (University of New Orleans, College of Business Administration) & Philip J. Harmelink (University of New Orleans, College of Business Administration) have published Individual Accountability for Tax Shelters, 108 Tax Notes 933 (Aug. 22, 2005), also available on the Tax Analysts web site as Doc 2005-16326, 2005 TNT 162-31.  Here is the Conclusion:

If the accounting firms are unwilling or unable to hold those individuals who signed returns employing son-of-BOSS tax shelters and similar schemes responsible, then regulators should hold them accountable (for example, as part of any settlement agreements, deferred prosecution agreements, or by IRS enforcement action). Importantly, the recommendation is equally applicable for lawyers and investment bankers. Those who signed the abusive tax shelter returns need to be held individually accountable. Preferably, accountability will occur from internal forces, rather than through external forces.

Already the accounting profession has seen honorable persons step forth. For example, the original source of PwC's BOSS greatly facilitated the government's response that led to son-of-BOSS agreements. There are tax professionals who refused to participate in those schemes. Now is the time for the accounting profession to dismiss those who did not act honorably. This is one of many steps needed to restore the public's confidence in the profession.

Importantly, employing that individual accountability strategy would allow the remaining members of those firms to make a clean and highly public break from past practices and to avoid the fate of Arthur Andersen, Enron, WorldCom, and so on. Unless accountants admit and effectively handle their past mistakes of pushing the bounds of acceptable behavior, the public will not have the confidence in the accounting profession that is so critical in our society.

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