According to the Manhattan U.S. Attorney's Office Ernst & Young admitted earlier this week to participating in a five-year tax fraud scheme on behalf of 200 clients and $2 billion in assets.

According to Accounting Today Ernst & Young "agreed to pay $123 million to the United States and acknowledged a detailed Statement of Facts in which it admitted the wrongful conduct of certain partners and employees. E&Y also agreed to certain permanent restrictions and controls on its tax practice, including a prohibition against planning, promoting or recommending any “listed transaction,” which is the same as, or substantially similar to, one that the IRS has determined to be a tax avoidance transaction." In return the U.S. will not criminally prosecute, but for all intents and purposes Ernst & Young committed some very serious felonies that likely would have destroyed a less "well-connected" firm.

Needless to say, for those of you seeking honest guidance on how to properly follow IRS regulations and such related tax matters we highly recommend that you steer clear of working with known criminal organizations. For instance, the IRS can consider any actions you take in reliance upon advice from fraudulent entities as grounds for not meeting your due diligence information reporting requirements and failing to act with reasonable care under the Internal Revenue Code; with amplified penalties or even more intrusive audits as a result.