Tax

IRS Audits PwC

Firm's partners could be liable for any penalties or back taxes.
Stephen TaubAugust 25, 2006

PricewaterhouseCoopers LLP is being audited by the Internal Revenue Service, according to Bloomberg, citing IRS and company documents. The wire service says the IRS is evaluating the timing of tax deductions, PwC’s pension plan, and how the firm moved profits between international units.

Bloomberg points out that the 2,000 U.S. partners at the world’s largest accounting firm could be liable for any back taxes, perhaps “scores of millions” of dollars, Robert Willens, a tax and accounting analyst at Lehman Brothers Holdings, told the wire service.

“If the pension plan were to be disqualified, the results would be potentially nuclear,” Richard Susko, a pension attorney and partner at law firm Cleary, Gottleib, Steen & Hamilton, told Bloomberg. He also said PwC could lose deductions it took on contributions to the pension plan. However, he seemed to think the IRS probably will “work out something less draconian.”

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According to the report, the review may be completed later this month and the IRS is expected to reach its conclusions by year-end.

The wire service said PwC officials declined to discuss the audit. “PricewaterhouseCoopers is a large organization and like any large entity is under constant review by various taxing jurisdictions,” Steven Silber, a spokesman for the firm, told Bloomberg.

It also noted that IRS spokesman Bruce Friedland declined to comment, saying federal audits are confidential.

According to the report, the IRS notified PwC of the audit in a June 3, 2005, letter to PwC tax partner Samuel Starr.