A KPMG LLP tax shelter that the Internal Revenue Service last year declared abusive had attracted an array of prominent U.S. companies, a sign of how popular and widespread efforts to shave corporate-tax bills have become.
The IRS has said the shelter generated at least $1.7 billion in tax savings for more than two dozen companies. Previously undisclosed internal documents from KPMG, which marketed the shelter, list a host of brand-name companies that agreed to buy it.
Delta Air Lines, Whirlpool Corp., Clear Channel Communications Inc., WorldCom Inc., Tenet Healthcare Corp. and the U.S. units of AstraZeneca PLC and Fresenius Medical Care AG all used the shelter, according to the companies and the KPMG records, which were reviewed by The Wall Street Journal.
The KPMG documents show that Qwest Communications International Inc., Washington Mutual Inc., Global Crossing Ltd., Lennar Corp. and the U.S. units of Cemex SA and Siemens AG signed agreements to buy the shelter, but those companies wouldn't say whether they implemented it.
The internal KPMG records, covering the years 1999 through 2001, offer a rare look at the inner workings of a highly aggressive shelter that KPMG sold under the name "contested liability acceleration strategy," or CLAS. The records also provide a look at what nearly all the past year's government investigations into KPMG and other tax-shelter promoters have kept a well-guarded secret: the identities of companies that bought so-called abusive tax shelters.
According to a July 2002 sworn statement filed by an IRS agent with a federal district court in Washington, 29 corporations bought CLAS from KPMG, realizing at least $1.7 billion in tax savings. The statement, based on information KPMG provided in response to an IRS summons, didn't name the companies.
By that measure, CLAS was more costly to the federal Treasury than any of the four KPMG tax shelters that were the subject of hearings held last November by the Senate's Permanent Subcommittee on Investigations, which focused mainly on shelters sold to wealthy individuals.
Flag-waving, tax-cheating Clear Channel is about as unpatriotic as it gets, rallying for a war that someone else pays for.
