In recent years, the IRS has enacted legislation to prevent the use of tax shelters
as vehicles that operate solely for the purpose of tax avoidance (see "abusive tax shelters
" below), but one of the key elements of tax shelter
partnerships prior to this legislative reform was the allocation of annual operating losses among the partners in such a manner that the investors seeking tax shelter
were allocated losses disproportionately greater than their true relative economic interest in the partnership.
7525 indicated that a routine relationship between a tax practitioner and a client did not amount to promotion of a tax shelter
for purposes of Sec.
The AJCA imposes a new, separate penalty on any person who fails to include on his tax return any required information or statement with respect to a tax shelter
The Service's tax shelter
initiatives do not limit the taxpayer's opportunities to resolve disputes; rather they expand it.
The interested reader is directed towards Bankman (1999), the source for much of the tax shelter
discussion in this section.
In the 1990s, nearly every big and midsize accounting firm was moving aggressively into the tax shelter
business for individuals and corporations, and the growth attracted the attention of U.
Both bills impose new penalties up to $200,000 for failure to comply with existing tax shelter
disclosure regulations, and increase the penalties for underpayments related to transactions required to be disclosed under the regulations.
Although the marketing of a tax shelter
usually concentrates on the tax savings aspect of the shelter, it is vital that you, as a prospective purchaser of a tax shelter
, look first at the economics and feasibility of the investment behind the tax shelter
The primary efforts to confront the tax shelter
issue have been in the tax courts.
The Canadian financial community became aware of the industry and sensitive to the possibilities of tax shelter
as an attractive vehicle for wealthy individuals and corporations.
The report, in the magazine's March issue, called one tax shelter
"abusive," a term used by the Internal Revenue Service to describe deals of dubious value.
The last day to participate in the California Tax Shelter
Resolution Initiative is April 3, 2006.
On September 22, 2007, the IRS released new Form 8886-T, Disclosure by Tax-Exempt Entity Regarding Prohibited Tax Shelter
Transaction, and the final instructions for its use.
The Franchise Tax Board will follow the IRS tax shelter
settlement initiative as outlined in IRS Announcement 2005-80, effectively creating the California Tax Shelter
Resolution Initiative to run alongside the federal initiative.
Boyle explained that "the key to stopping tax shelter
abuses is the effective administration of the tax law's substantive provisions," which depends, in turn, "on the ability of IRS agents to identify and analyze transactions.