According to the DOJ Tax press release on the guilty plea on December 1 here:
According to the plea agreement and statements made during the hearing before United States District Judge Sandra S. Beckwith in Cincinnati, Parker admitted to conspiring with Daryl Haynor, an accountant who was a tax partner at KPMG LLC, in its Tysons Corner, Va., office, and Jon Flask, an attorney for TransCapital, who was a partner at a law firm in Vienna, Va., to defraud the IRS with regard to tax shelter transactions. Parker admitted that he was both a CPA and an attorney, but acted as the Chief Operating Officer of TransCaptial Corporation. In October 2009, Haynor and Flask were indicted for conspiracy to defraud the IRS and for corruptly endeavoring to obstruct and impede the due administration of the internal revenue laws.Other than the press releases and the smattering of newspaper articles that I have read, I have no further detail. I do, however, have several comments based on the press release.
According to the plea agreement and statements made during the hearing, from 1998 through 2006, Parker, Haynor and Flask marketed and implemented a tax shelter to KPMG clients called the Sale Leaseback of Tenant Improvements Strategy (SLOTS), which enabled various U.S. corporations to claim tax deductions totaling more than $240 million on corporate income tax returns filed with the IRS. During 2002 through 2004, the IRS audited three U.S. corporations that had claimed losses generated by SLOTS transactions, including The Kroger Company. Parker identified Kroger as the Fortune 500 corporation which did the largest SLOTS tax shelter transaction, and which claimed over $178 million in loss deductions, causing over $64 million in tax loss to the IRS. Parker admitted that he, Haynor and Flask conspired to impede and impair the IRS by making false and misleading statements to IRS agents and attorneys during these audits, including the Kroger audit. Additionally, Parker admitted that he, Haynor and Flask concealed certain aspects of the tax shelter transaction from SLOTS clients, including Kroger, for the purpose of impeding and impairing the IRS. Parker further acknowledged that the SLOTS tax shelter and related transactions were themselves nothing more than devices to disguise and conceal mere financing transactions.
1. The plea is to conspiracy which is the sole count in the information as well as in the indictments of the others. It is noteworth, I think, that the Government did not include tax evasion counts. I suppose this can serve as warning to taxpayers and practitioners that the Government stands ready to indict for misbehaving even if the tax shelter is not fraudulent.
2. The plea to conspiracy offers the Government great advantage in the ongoing case against the other two indicted defendants.
3. For students not familiar with the song and dance for DOJ Tax press releases, you will note that the press release is careful to state that the information is from the guilty plea. In press releases such as this DOJ Tax and the IRS have to be careful to provide only information that it has derived from public information such as indictments and guilty pleas in order to not violate Section 6103, the general prohibition on disclosing return information which is defined broadly to include the fruits of IRS investigations. A parallel rule, FRCrP Rule 6(e) prohibits disclosure of grand jury matters, so DOJ Tax and the IRS have to be careful to include in press releases only information that has been made public.