- Longtime downtown Cape bartender Marcellus Jones remembered by friends (6/12/18)2
- Peter Kinder resigns federal agency post, concludes position unnecessary and waste of tax dollars (6/16/18)2
- Stormy Daniels to visit East Cape Girardeau (6/13/18)20
- Singer Neal Boyd dies after struggle with health issues (6/12/18)1
- Feeding deer in Bollinger, Cape and Perry counties prohibited soon to help curb spread of CWD (6/13/18)7
- Cape man charged with stabbing, killing dog for revenge (6/8/18)9
- Couple charged in beating death at Brick's (6/13/18)
- A community rallies behind Honorable Young Men's Club (6/16/18)
- New Zaxby's restaurant open in Cape (6/13/18)3
- New urban dance studio opens on Broadway (6/15/18)2
IRS to give 4-month penalty waiver if taxpayers disclose deals
WASHINGTON -- People and corporations concerned that their tax shelter arrangements might be questionable will have four months to disclose the deal to the IRS without fear of paying stiff penalties.
The ultimate target is promoters of sham transactions that cost the government billions of dollars a year in unpaid taxes.
"It helps us identify the bigger fish out there," IRS spokesman Terry Lemons said Friday.
From now until April 23, many taxpayers can report shelter transactions to the Internal Revenue Service without having to pay an accuracy-related penalty that can reach 20 percent of the amount of underpaid taxes.
Tax shelters marketed to corporations and wealthy individuals are estimated to cost the United States at least $10 billion a year in lost tax revenue. Tax shelters, some of which are legal, are ways individuals and businesses can shield income from taxation or take advantage of greater tax deductions.
The Treasury Department and IRS have for several years pursued a crackdown, mainly through tougher disclosure rules that require promoters to register the deals with the government. Nineteen abusive shelters have been identified and shut down since a special IRS office was created to track them.
Larry Langdon, commissioner of the IRS large and midsize business division, said many promoters do not register, so the IRS can't analyze the legality of their shelters or find out how many taxpayers might be involved.
Not an amnesty
At the same time, taxpayers often buy into the sales pitch made by the promoter when the transaction may in fact not pass muster with the IRS or the courts. These taxpayers, Langdon said, might have been reluctant to come forward despite their worries, knowing they could face stiff penalties.
"They now have additional incentive to bring any questionable transactions to the IRS's attention," Langdon said.
The four-month disclosure period is not a general amnesty. Taxpayers could face other penalties that might apply as well as interest and, possibly, criminal charges.
In a few circumstances, the IRS will not waive the tax underpayment penalty. These include situations in which the taxpayer made up a fictitious transaction, was involved in fraud or concealed interests in a foreign bank account or foreign trust. The penalty also still applies to the taxpayers who attempt to deduct personal living costs as business expenses.
A taxpayer who comes forward must describe the transaction in detail, give names and addresses of the promoters and provide the IRS with copies of any documents requested.