July 02,2003

Grassley on Ernst & Young's Tax Shelters Agreement

M E M O R A N D U M

To: Reporters and Editors
Re: Ernst & Young tax shelters agreement
Da: Wednesday, July 2, 2003

Sen. Chuck Grassley, chairman of the Committee on Finance, made the following commenton today’s announcement by the Internal Revenue Service of an agreement with Ernst & Young,LLP, resolving issues relating to an examination of Ernst & Young’s compliance with theregistration and list maintenance requirements regarding the firm’s marketing of tax shelters.

“Violating tax shelter rules shouldn’t be a negotiable offense. That the IRS had to negotiateErnst & Young’s compliance underscores the need to pass the Grassley-Baucus shelter legislation.We expand the shelter registration and customer list requirements and establish stiff penalties fornoncompliance.

“It shouldn’t surprise anyone that Ernst & Young is so deeply involved in tax shelters.Unfortunately, Ernst & Young isn’t alone. We continue to hear about tax shelters being promotedby other accounting firms, law firms, and investment banks. Ernst & Young distributed a videoWebcast promoting corporate expatriations in the wake of the post-September 11th stock marketslide. I just hope a $15 million penalty is large enough to get their attention.”