A similar probe was launched into fellow Big Four firm KPMG in February and follows falling corporate tax receipts, which contributed just 7.4% to the total US tax bill, the Wall Street Journal reported.
Almost two-thirds of companies in the US paid no tax in 2000.
E&Y reached a settlement last July over similar allegations, paying $15m (£8.4m) to resolve charges that it failed to comply with rules governing tax shelters, including keeping lists of companies who use them.
It did not admit to any wrongdoing.
Carolyn Brown appointed as the first head of client legal services practice RSM Legal
UK senior partner Phil Verity has been elected for a second term at Mazars
Tallat Mahmood appointed to corporate finance team of Top 20 firm
Top 25 firm HW Fisher & Co has acquired London firm Rhodes & Rhodes