abusive tax shelter


Also found in: Acronyms.

Abusive tax shelter

A limited partnership that the IRS judges to be claiming tax deductions illegally.

Abusive Tax Shelter

An investment vehicle or other structure with no purpose other than to reduces one's tax liability. Often, an abusive tax shelter takes the form of a partnership or trust. Taxpayers caught using abusive tax shelters to avoid or evade taxation must pay the applicable taxes plus interest. To bypass accusation of arbitrary enforcement, the IRS publishes a list of investment vehicles that are considered abusive tax shelters, though one may face penalties for using a scheme that even resembles something on the list.

abusive tax shelter

A tax shelter in which an improper interpretation of the law is used to produce tax benefits that are disproportionate to economic reality.
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1) The name of each transaction that is a potentially abusive tax shelter and the registration number, if any, obtained under [section] 6111 of the Code;
99) The remedy for solving the abusive tax shelter problem should not have the ancillary effect of making it impossible for a taxpayer to reasonably rely on the opinion of the taxpayer's CPA or attorney.
The Treasury Department has made clear that they feel that the issue of abusive tax shelters is a matter of national importance.
At first promoters of these abusive shelters denied wrongdoing and resisted efforts to settle claims against them, but in recent years a number of important players in the abusive tax shelter industry have either settled or ended UP on defense in court.
Abusive tax shelters are transactions marketed with the promise of tax benefits with no correlating risk of economic losses.
The IRS identified the Virgin Islands Economic Development Commission (EDC) program as a target of its abusive tax shelter program.
Other states have also issued non-statutory, abusive transaction rules, including Connecticut (Connecticut Department of Revenue Services Announcement 2004(5)) on June 16, 2004) (announcement of its abusive tax shelter compliance initiative) and South Carolina (Tax Shelter Amnesty Period, announced July 22, 2004).
In 2006, Congress enacted the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA), which includes new excise taxes and disclosure rules for tax-exempt entities--including tax-qualified retirement plans--involved in certain potentially abusive tax shelter transactions.
In August, both senators expressed in a joint statement their concern over, and intent to address, abusive tax shelter transactions that facilitate avoidance of legitimate individual and corporate tax obligations.
Excluded from participating are taxpayers currently under criminal investigation for tax-related matters; or taxpayers with abusive tax shelter transactions that were eligible to participate in either last year's Voluntary Compliance Initiative or the 2003 IRS Offshore Voluntary Compliance Initiative.
Amnesty is open to all individuals and businesses, except taxpayers under criminal investigation or prosecution on tax-related matters, and abusive tax shelter transactions that were eligible for relief under California's Voluntary Compliance Initiative or the 2003 IRS Offshore Voluntary Compliance Initiative," she said.