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.