WASHINGTON — Former Sen. Paul Laxalt is lobbying the Treasury Department to allow wealthy individuals who have invested in questionable tax shelters to escape sizable interest and penalty charges in return for paying the back taxes the Internal Revenue Service says they owe.
The lobbying effort would save billions of dollars for hundreds of thousands of investors who obtained improper tax write-offs through the shelters, according to the IRS, which is opposed to the proposal. Law firms representing some of those investors hired Laxalt's law firm to push the proposal.
As a result of the plan, supporters estimate, federal tax receipts would rise by as much as $8.6 billion in 1988 and $1.2 billion in 1989. But the proposal would reduce revenues in subsequent years, in part because the Treasury would not be collecting interest and penalties on the contested tax claims.
Sends Plan to Treasury
Laxalt, a Nevada Republican and close friend of President Reagan, said through a spokesman that he has made a "full presentation" of the proposal to Treasury Secretary James A. Baker III, whose aides are analyzing the plan.