Andersen faces US tax inquiry

Andersen, the accounting firm ravaged by its involvement in numerous US corporate scandals, is facing another investigation – this time by the US tax authority.

The probe focuses on the firm's involvement in promoting tax shelters that have "potentially" hidden up to $1.6bn (£1bn) in revenues.

The Internal Revenue Service (IRS), which is the US version of the Inland Revenue, has filed a petition in the Chicago federal court in an attempt to force Andersen to provide information. The authority is investigating whether the US division of Andersen may be liable for fines, for not complying with the rules governing tax shelters.

The IRS said it had found evidence that Andersen has promoted tax shelter transactions that have "likely improper tax deductions" of between $10m and $1.6bn.

The petition stated that the IRS had served 19 summonses to Andersen in April, requesting information. It said responses to the summonses were inadequate, so it is asking the court to force Andersen to produce the relevant documents.

Andersen collapsed earlier this year following a string of accounting scandals in the US. It had audited the accounts of Enron, WorldCom and Global Crossing and was found guilty by the US Department of Justice of obstructing the Enron investigation.

The accounting firm was broken up and the parts were sold on a country-by-country basis. In the UK, the Andersen practice was sold to Deloitte & Touche. In the US, the practice still exists in fragmented form.

The court petition is part of a wider investigation into tax avoidance shelters.

Andersen has claimed in the American media that it has responded to the court petition by saying that it had given the IRS significant amounts of information, and that it had to protect its clients' confidentiality.

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