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| May 12, 2004 | |||
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SENATE ADOBTS LEVIN-COLEMAN AMENDMENT TO CLAMP DOWN ON TAX SHELTER ABUSE
Tougher penalties will increase penalties for promoters of abusive tax shelters |
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Today the Senate unanimously adopted an amendment offered by Sen. Carl Levin, D-Mich. and Sen. Norm Coleman R-Minn., the senior Democrat and Chairman on the Senate Permanent Subcommittee on Investigations, to increase penalties on persons who promote abusive tax shelters or knowingly aid or abet tax evasion.
“Abusive tax shelters are undermining the integrity of our tax system, robbing the treasury of tens of billions of dollars each year, and shifting the tax burden from high-income corporations and individuals onto the backs of the middle class,” Levin said. “Current tax shelter penalties are a joke. A $1,000 fine for selling a million-dollar abusive tax shelter is equivalent to a parking ticket and an invitation to continuing abuse. Our amendment would help put a stop to the millions of dollars in profits that now fuel the promotion of abusive tax shelters.” “As a result of the PSI hearings on abusive tax shelters, I vowed to work with Senator Levin on legislative solutions,” Coleman said. “Today, I am pleased that both sides of the aisle were able to agree that harsher penalties for tax shelter promoters is such a solution. Our amendment’s provisions to substantially increase penalties for the promoters who manufacture these sham transactions so that they must give back all of their ill-gotten gains is vital to restoring the integrity of our tax laws and deterring future tax avoidance. Equally, increasing the amount of penalties for aiders and abetters of tax shelters to include entities other than the tax return preparer will address the issue of accountants, lawyers, investment advisors, and bankers who collaborate and facilitate putting together abusive tax scams that rob the Treasury of billions of dollars in revenue.” The Levin-Coleman amendment was offered to a tax bill, S.1637, undergoing Senate consideration. Prior to the amendment’s adoption, S.1637 had raised the maximum civil penalty for promoting an abusive tax shelter from $1,000 under current law to 50% of the gross income earned by a tax shelter promoter from an abusive shelter. Because the proposed penalty allowed promoters to keep half of their tax shelter income, the Levin-Coleman amendment doubled the penalty to 100%. By setting the penalty at 100% of the tax shelter income, the amendment ensures that promoters would be unable to keep any of their ill-gotten gains. “Tax chiseling hurts average Americans by forcing them to make up lost revenues and constricting resources for essential government programs,” Levin continued. “Promoters of abusive tax shelters should not profit from their misdeeds, but a 50% penalty would continue to allow them to do exactly that. Requiring an abusive tax shelter promoter to cough up all of its ill-gotten gains is fair and is a needed step toward providing a real deterrent.” The promotion of abusive tax shelters is prohibited under tax code section 6700, while the prohibition on aiding or abetting a taxpayer’s understatement of tax liability is contained in tax code section 6701. |
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