How big is the problem of abusive tax shelters?
Estimating how much abusive tax shelters cost the U.S. Treasury is very difficult. Some estimate the cost is in the tens of billions every year and a few deem it as high as $50 billion a year. Others suggest that the abusive shelter problem has largely abated — a victim of the recession, increased regulatory requirements (such as the Sarbanes-Oxley legislation regulating the accounting industry) and post-Enron sensitivity to good corporate governance. Former IRS Commissioner Charles Rossotti believes, however, that the “fundamental drivers” behind the shelter problem remain present and that abusive shelters will rebound as the economy improves. In October 2003, the General Accounting Office (GAO) released a report, “Challenges Remain in Combating Abusive Tax Shelters” that notes, “Although they do not have a reliable measure of the size of the abusive shelter problem, Treasury and IRS believe that tens of billions of dollars of taxes are being improperly avoided and the potential for
