The Internal Revenue Service is chasing down scores of companies and their executives who participated in a stock option tax shelter scheme to settle up their tax bills. In many cases the tax service was sold to corporate officers by audit firms attesting to the financial statements, representing just the kind of tax service that led the Public Company Accounting Oversight Board to introduce new rules creating greater separation of audit and tax services.
The IRS says it has identified 42 corporations who participated in the scheme, representing more than $700 million in unreported income. A separate report issued recently by the U.S. Government Accountability Office says its own study identified 61 companies among the Fortune 500 alone, representing as much as $3.4 billion in revenue lost to the federal government from 1998 to 2003.
