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November 10, 2009

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Government moves to ban abusive tax shelter

Friday, Jan. 2, 2004 | 11:23 a.m.

The shelter uses shell corporations to funnel investment contributions into the retirement accounts far in excess of the current limit of $3,500 a year.

The two agencies declared the shelter a "listed transaction," meaning that taxpayers, both individuals and companies, must disclose their use of the shelter to the IRS and that promoters, like accounting firms and lawyers, must keep lists of such taxpayers.

Such disclosure gives the Internal Revenue Service a way of pursuing the shelter's users and promoters, both of whom had carried out the transactions in secret. The agency is going after taxpayers who abuse shelters and in many cases is seeking back taxes and penalties.

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