KPMG 'obstructed US tax inquiry'

The accounting industry has been under fire

The US Justice Department has accused accountancy firm KPMG of obstructing an investigation into tax shelters.

According to a court filing, KPMG has withheld documents, delayed the handing over of others and concealed its role in offering advice on avoiding tax.

The IRS has been investigating KPMG since last year, calling on the company to divulge information on tax shelters.

KPMG's actions "demonstrate a concerted pattern of obstruction," said the US Department of Justice.

While KPMG has not been charged with any offence, the IRS probe set out to find whether it should face censure for promoting tax shelters that may have broken the law.

Court papers

Monday's filing with a US district court in Washington aims to force the company into handing over more information, much of it protected by attorney-client privilege.

The court papers allege that KPMG's actions "demonstrate a concerted pattern of obstruction and non-compliance, threatening the integrity of the IRS examination process".

The company denied the allegations, saying it has co-operated fully with the investigation.

The industry has been trying to rebuild its reputation since corporate scandals such as Enron highlighted accounting errors.

KPMG's former rival, Andersen, collapsed because of its role in the scandal.