The US Internal Revenue Service on Thursday announced a broad-based, limited-in-time opportunity for taxpayers to come forward and settle an array of transactions the IRS considers abusive.
Taxpayers who undertook these deals will have until January 23, 2006 to submit their settlement papers to the IRS.
The initiative identifies 21 transactions eligible for the program. Consisting of both listed and non-listed transactions, they include a wide cluster of schemes involving funds used for employee benefits, charitable remainder trusts, offsetting foreign currency option contracts, debt straddles, lease strips and certain abusive conservation easements.
All eligible transactions carry the same settlement terms except the applicable penalty level.
“People entered into these deals often at the behest of lawyers and accountants peddling flaky tax products,” explained IRS Commissioner Mark W. Everson, continuing:
“Times have changed. The IRS has acted to shut down these deals, as has the Congress, in passing stiffer disclosure requirements and promoter penalties last fall. We’re offering taxpayers a quick, quiet and cost effective way to put these deals behind them.”
The IRS has now identified more than 4,000 taxpayers involved in these 21 transactions, and continues to uncover additional participants through tax return examinations and the agency’s promoter audit program.
Under the settlement terms, participants, both individuals and companies, will be required to pay 100 percent of the taxes owed, interest and, depending on the transaction, either a quarter or a half of the penalty the IRS will otherwise seek. There will, however, be penalty relief for transactions disclosed to the IRS or where the taxpayer got a tax opinion from an independent tax advisor.
The full text of the IRS Tax Shelter Settlement Initiative Terms can be found in the Tax News Resources section.
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