Treasury Targets Tax Shelters
The Treasury plans on strengthening the ethics rules for both lawyers and accountants after calling tax shelters one of the nation's worst tax abuses. These proposed regulations would reinforce the existing standards, known as Circular 230, regarding factual due diligence and legal analysis. This would also help ensure that practitioners look carefully at whether a transaction has a legitimate business reason and is not just being done solely for the tax benefits.
New proposed regulations exclude contingency fees based on a tax benefit winning Internal Revenue Service approval, permit the IRS to publicly reprimand or censure people whose offenses do not result in disbarment, and require firms to set up compliance procedures.
"Abusive tax shelters are the most serious compliance problem in the U.S. tax system," said Treasury Secretary Lawrence H. Summers. "These proposed measures would deter the purveyance of these shelters, protect the integrity of our tax system and ultimately reduce the tax burdens of honest taxpayers."
A public hearing is scheduled for May 2, 2001 on these proposed rules. The new rules were developed in with the approval of the American Bar Association and the American Institute of Certified Public Accountants. View more on this story in the Washington Post.