Sidley Austin LLP Pays IRS $39.4 Million Penalty
The IRS reached a settlement yesterday with the law firm of Sidley Austin LLP, which paid a civil tax shelter promoter penalty of $39.4 million. The penalty results from the firm’s failure to comply with tax shelter registration requirements and promotion of abusive tax shelters.
The firm issued opinions in connection with potentially abusive tax shelters to over 700 high-net worth individuals and corporations. Some of the packages marketed to these individuals included listed transactions such as BOSS (Bond & Option Sale Strategy), variants of the so-called “Son of BOSS” shelter that went by names of BLIPS (Bond Linked Issue Premium Structure), COBRA (Currency Options Bring Reward Alternatives), and COINS (Currency Option Investment Strategy), and others that went by the names of OPIS (Offshore Portfolio Investment Strategy), FLIP (Foreign Leveraged Investment Program), and POPS (Partnership Option Portfolio Securities).
The firm also issued tax opinions in connection with certain potentially abusive non-listed transactions involving distressed assets, bond and equity strips and lease strips.
“Sidley Austin has paid a significant penalty for its role in promoting abusive tax shelters,” said IRS Acting Commissioner Kevin M. Brown. “The firm has also taken concrete steps to prevent a recurrence of this behavior in the future, which they have agreed to maintain going forward. We appreciate their actions and their cooperation in our ongoing investigations.”