How the Super Rich Avoided Taxes; Despite Making Millions

Source: ABC News
Four current and former partners at Ernst & Young, one of the world's largest accounting firms, were indicted Wednesday for allegedly orchestrating a scheme to create illegal tax shelters for the firm's richest clients.

The scam catered to clients who earned more than $10 million to $20 million a year, finding them ways to reduce their taxes, according to an indictment handed up in the federal court for New York's Southern District.

Ernst & Young took in more than $115.7 million in fees for setting up these shelters, charging clients between 1.25 percent and 2 percent for every dollar of tax deductions created, according to the indictment. The firm assisted more than 400 wealthy clients in reducing their taxes through such shelters.

According to ABC News' calculations, that could mean that Ernst & Young helped its clients create more than $7.56 billion in tax deductions.

One of these complicated tax shelters involved converting clients' ordinary income into capital gains.
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