Case Study : Kpmg Tax Shelter Business

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Case 1.4 KPMG Tax Shelter Business KPMG was one of the biggest accounting firms in the 90’s that with a lucrative end, would serve wealthy companies using forged revenues in order to avoid taxes. The accountants that worked for the firm were expected to meet certain quotas. Consequently, instead of trying to run an honest business they were trying to maximize the sales using all kinds of dishonest marketing approaches. KPMG employees used foreign banks as well as bogus law firm statements to preserve a legitimate business running. This accounting firm manipulated financial data of clients, costing the internal revenue service over 2.5 billion in lost tax revenue The line between a legal and illegal strategy used by KPMG is hard to recognize. KPMG would hide (shelter) money from the IRS to avoid taxable earnings. Since the financial resources of a company are not taxed when they are being invested outside of the United States, KPMG would take advantage and move earnings of a company to foreign banks. Technically, the unseen money was not taxed but should have been because it was not being invested outside of the country. The earning were falsely moved to foreign banks for the pure purpose of avoiding taxes. There was nothing the IRS could do to acknowledge the fact that all these earnings were not in fact investments. The only benefactors of the situation were wealthy companies and, of course, KPMG. When the dishonest policies used by KPMG were discovered, the clients of
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