IRS Targeting Doubtful Tax Shelters

The Internal Revenue Service says it will forgo penalties for taxpayers who voluntarily disclose the use of doubtful tax shelters.

The move will give taxpayers until April 23 to reveal the use of questionable tax shelters and the name of the shelter promoter, the agency said in a news release.

The IRS said it will not impose its traditional penalty--20% of the underpaid tax--but will require taxpayers to pay the taxes that should have been paid and the interest on them, the agency said.

The agency said it will use the information gathered under the new rules to target promoters who have not followed requirements to register questionable shelters. The rules also will help the IRS find tax shelters, warn potential clients and teach its own agents how to look for them, it said.

“The IRS believes some taxpayers entered into questionable transactions based on the representations of promoters who marketed these tax shelters,” said Larry Langdon, commissioner of the agency’s Large and Mid-Size Business Division.

“They now have additional incentive to bring any questionable transactions to the IRS’ attention,” he said.

The amnesty program doesn’t apply to taxpayers involved in fraud, criminal conduct, concealing a foreign account or trust or the treatment of personal expenses as deductible business expenses.