Therefore, although the transactions at issue were tax shelters
under the Seventh Circuit's definition in Valero, if the Seventh Circuit had issued the decision in Countryside, it may well have decided that Egan was not promoting the shelters and that Countryside was not subject to the exception for this reason.
Because these actions have substantially curbed tax shelter
activities, no further action is warranted.
A November 2003 report from the Senate Permanent Subcommittee on Investigations concluded that "dubious tax shelters
are no longer the province of shady, fly-by-night companies, .
Tax professionals advising on tax shelters
who fail to register the tax shelter
are subject to a registration penalty of up to 75 percent of their gross income from providing tax shelter
The Treasury Department and the Internal Revenue Service (IRS) believe that the most effective way to curb inappropriate tax shelter
behavior is to shine an early spotlight on potentially abusive transactions by requiring detailed tax return disclosures.
The number of tax shelters
has declined significantly over the past fifteen years with the gradual introduction by the federal government of more and more tax rules to combat what it sees as abuses of the tax system by tax shelters
However, the factor of most concern to the Treasury Department is the rapid increase in the use of illegitimate tax shelters
by large companies.
Estimates show that abusive tax shelters
cost California $500 million in lost tax revenue each year.
The IRS first used transaction pattern evidence successfully to challenge individual tax shelters
in which different individuals invested in the same shelter.
As TEI put in its letter about Announcement 2005-80, "This is not about tax shelters
, but about the fundamental nature of [taxpayer rights].
The IRS has been developing policies to attack a variety of tax shelters
including the contingent liability shelter, in which a high-basis asset is transferred to a new corporation in exchange for stock in an IRC section 351 transaction.
However, despite such representations by these trusted advisors, the IRS has determined that many existing tax shelters
marketed as "legitimate" are in fact improper, and is currently investigating over 100 accounting, banking, and legal firms for promoting illegal tax shelters
An area of recurring controversy has been the increase in transactions that are potentially abusive tax shelters
corporation decides to reincorporate in an offshore tax haven; and Section 3 covers tax shelters
Between 1976 and 1983, the amount of money in tax shelters
is believed to have risen ten-fold, from $2 billion to $20 billion.