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Legal fee issue leads to dismissal of tax-shelter charges

July 16, 2007

A federal judge today dismissed indictments against 13 former KPMG executives in what has been called the biggest criminal tax case in U.S. history.

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U.S. District Judge Lewis A. Kaplan issued his ruling (full text here, courtesy of the Wall Street Journal), saying he had no alternative but to dismiss the indictment after determining last year that prosecutors violated the former accounting firm executives’ constitutional rights by putting undue pressure on KPMG not to advance them defense costs.

The dismissal is not necessarily bad news for the feds.

In fact, federal prosecutors had urged the judge to do just that. The reason, according to some legal experts, is that is could allow the government to resume its case against all of the defendants if a higher court overrules Kaplan on the constitutionality issue.

And so grind on the wheels of tax justice.

To help you keep track, the WSJ‘s Law Blog has The KPMG Case for Dummies.

Protect yourself: The folks who come up with creative tax shelters aren’t the only ones who end up paying. If you get involved in one that the IRS rules is abusive, you’ve got to pay back any tax breaks the set-up originally got you.

For tips on how to avoid buying into an abusive tax shelter, check out this story written shortly after the KPMG shelter case broke.

 

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TO WRAP UP 2026

It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

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