Confidence Games: Lawyers, Accountants, and the Tax Shelter Industry

Confidence Games: Lawyers, Accountants, and the Tax Shelter Industry

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Overview

The rise and fall of a tax shelter industry that enabled some of America's richest citizens to avoid paying their fair share of taxes.

For ten boom-powered years at the turn of the twenty-first century, some of America's most prominent law and accounting firms created and marketed products that enabled the very rich—including newly minted dot-com millionaires—to avoid paying their fair share of taxes by claiming benefits not recognized by law. These abusive domestic tax shelters bore such exotic names as BOSS, BLIPS, and COBRA and were developed by such prestigious firms as KPMG and Ernst & Young. They brought in hundreds of millions of dollars in fees from clients and bilked the U.S. Treasury of billions in revenues before the IRS and Justice Department stepped in with civil penalties and criminal prosecutions. In Confidence Games, Tanina Rostain and Milton Regan describe the rise and fall of the tax shelter industry during this period, offering a riveting account of the most serious episode of professional misconduct in the history of the American bar.

Rostain and Regan describe a beleaguered IRS preoccupied by attacks from antitax and antigovernment politicians; heightened competition for professional services; the relaxation of tax practitioner norms against aggressive advice; and the creation of complex financial instruments that made abusive shelters harder to detect. By 2004, the tax shelter boom was over, leaving failed firms, disgraced professionals, and prison sentences in its wake. Rostain and Regan's cautionary tale remains highly relevant today, as lawyers and accountants continue to face intense competitive pressure and regulators still struggle to keep pace with accelerating financial risk and innovation.



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Product Details

ISBN-13: 9780262323178
Publisher: MIT Press
Publication date: 05/02/2014
Series: The MIT Press
Sold by: Penguin Random House Publisher Services
Format: NOOK Book
Pages: 424
Sales rank: 296,476
File size: 852 KB
Age Range: 18 Years

About the Author

Tanina Rostain is Professor of Law and Research Director of the Center for the Study of the Legal Profession at Georgetown Law School.

Milton C. Regan, Jr., is Codirector of the Center for the Study of the Legal Profession and McDevitt Professor of Jurisprudence at Georgetown Law School.

Table of Contents

Acknowledgments and Note on Sources ix

Introduction 1

Part I Shelters Rising

1 The IRS under Siege 11

2 Why Tax Shelters Matter 25

3 Gimme Shelters 45

Part II Accounting Firms

4 The Skunk Works 77

5 Watson's Choice 103

6 Accounting for Fraud 133

7 Dances with Wolves 155

Part III Law Firms

8 The Texas Juggernaut 177

9 Lowering the Bar 217

Part IV The Reckoning

10 Turning the Tide 243

11 The Government Closes In 273

12 Endgame: KPMG and Jenkens 297

Conclusion 325

Notes 351

Index 395

What People are Saying About This

Anne L. Alstott

Rostain and Regan have captured one of the most interesting—and most troubling—episodes in the checkered history of tax shelters. Their analysis raises critical ethical and policy questions about how we train, monitor, and discipline lawyers and other financial professionals today.

Claire Hill

This book manages what many might think impossible: it's a page-turner about tax. It shows what can happen when very smart people unconstrained by ethics invent and use ingenious schemes. The history is fascinating in its own right, but it is also, unfortunately, a much-needed reminder of how gameable regulation can be.

David Cay Johnston

Confidence Games is a lively and deeply informed human story of what went on inside the big legal and accounting firms before, during, and after the tax shelter scandals that made front page news at the turn of the millennium. Rostain and Regan give readers a solid primer, translating arcane principles of accounting. Then they add a human touch with telling details mined from a public record few others have explored.

Diane Ring

Few of us imagine that we will cross the line in our professional lives—and be jailed, fined, or both. But Confidence Games tells a sobering tale of individual weakness and institutional and regulatory failure that allowed esteemed law firms, accounting firms, and multinationals to reap illegal profits at the expense of the nation.

Endorsement

Rostain and Regan have captured one of the most interesting—and most troubling—episodes in the checkered history of tax shelters. Their analysis raises critical ethical and policy questions about how we train, monitor, and discipline lawyers and other financial professionals today.

Anne L. Alstott, Jacquin D. Bierman Professor in Taxation, Yale Law School

From the Publisher

Confidence Games is a lively and deeply informed human story of what went on inside the big legal and accounting firms before, during, and after the tax shelter scandals that made front page news at the turn of the millennium. Rostain and Regan give readers a solid primer, translating arcane principles of accounting. Then they add a human touch with telling details mined from a public record few others have explored.

David Cay Johnston, Pulitzer Prize-winning tax journalist and Syracuse University law and accounting lecturer

Few of us imagine that we will cross the line in our professional lives—and be jailed, fined, or both. But Confidence Games tells a sobering tale of individual weakness and institutional and regulatory failure that allowed esteemed law firms, accounting firms, and multinationals to reap illegal profits at the expense of the nation.

Diane Ring, Professor of Law, Boston College Law School, and coauthor of Ethical Problems in Federal Taxation

This book manages what many might think impossible: it's a page-turner about tax. It shows what can happen when very smart people unconstrained by ethics invent and use ingenious schemes. The history is fascinating in its own right, but it is also, unfortunately, a much-needed reminder of how gameable regulation can be.

Claire Hill, Professor and James L. Krusemark Chair in Law, University of Minnesota Law School

Rostain and Regan have captured one of the most interesting—and most troubling—episodes in the checkered history of tax shelters. Their analysis raises critical ethical and policy questions about how we train, monitor, and discipline lawyers and other financial professionals today.

Anne L. Alstott, Jacquin D. Bierman Professor in Taxation, Yale Law School

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