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IRS Offers Leniency to Users of Questionable Tax Shelters

October 28, 2005|From Bloomberg News

The Internal Revenue Service is giving taxpayers who used dubious tax dodges a limited-time offer to fess up, pay up and avoid onerous penalties.

The program covers 21 transactions, or more than half of all known tax shelters. It requires taxpayers to pay 100% of tax liabilities and interest.

In some cases, taxpayers will be liable for penalties, but the penalties will be reduced for those who come forward, and they may be waived if the individual had properly disclosed his or her participation in the shelter in advance.

The agency has identified 4,000 individuals who used the targeted shelters. It believes that far more people are involved.

The IRS called the program a win-win for tax authorities and taxpayers.

"What taxpayers get out of this is they are able to put this matter behind them and they do not become publicly identified," IRS Commissioner Mark W. Everson said.

The IRS would benefit because it wouldn't have to devote more time and resources to catch the tax cheats.

Everson urged taxpayers to contact the IRS before the initiative's deadline of Jan. 23.

He estimated that the program would bring in billions of dollars in lost revenue.

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