The IRS announced on Friday that more than $3.2 billion has been collected in the biggest ever crackdown on improper tax shelters. In addition, the states of Arizona, Illinois, Maine, Michigan, New York, Ohio, Utah, and Virginia have collected more the $23.5 million in voluntary state tax return amendments.
The $3.2 billion has been collected from 1,165 taxpayers participating in the âSon of Bossâ tax shelter settlement. The settlement initiative required taxpayers to concede 100 percent of the tax losses claimed using the âSon of Bossâ strategy as well as a penalty of 10 to 20 percent if they had not previously disclosed the losses to the IRS. The total amount collected is expected to climb to $3.5 billion in coming months as the May 23 deadline for participation approaches.
As part of a larger partnership between the IRS and the states, a total of $161 million in disallowed losses and assessments of nearly $16 million in taxes has been collected by Colorado, Connecticut, Maine, Maryland, Missouri, North Dakota, Pennsylvania, Utah, and Virginia. More states are expected to show significant benefits as the initiative progresses. Some states are pursuing âSon of Bossâ participants through their own programs.
âSon of Bossâ was a particularly abusive transaction that was aggressively marketed primarily to wealthy individuals during the 1990's and 2000. A spinoff of an earlier bond and option sales strategy known as Boss, participants used currency options and similar financial products to create false losses to offset gains made by selling stock options or other business assets. The IRS declared âSon of Bossâ an abusive tax shelter in 2000.
âThe IRS efforts to share information on their Son of Boss initiative with the states is just one more example of the reinvigorated effort of IRS and the states to work together to combat abusive tax transactions,â said Harley T. Duncan, executive director of the Federation of Tax Administrators, as association representing tax administration agencies in the 50 states, the District of Columbia and New York City. âWe're excited by the results, and these efforts send a very clear message that engaging in abusive transactions has consequences at the federal, state and local levels.â