What are Congress and the Bush administration doing to resolve the problem of abusive tax shelters?
Both the Senate and the House of Representatives have held hearings over the past few years examining the tax shelter problem. Several lawmakers have introduced bills to address the problem. Most bills include provisions that would increase penalties on shelter promoters for failing to register their products. The Senate has passed broad shelter reform legislation that includes both increased penalties and codification of the “economic substance” doctrine. But, similar legislation has repeatedly stalled in the House Ways and Means Committee. The Bush administration has included several provisions relating to abusive tax shelters in its budget for Fiscal Year 2005. The administration’s proposals include an increase in promoter penalties and an increase in the IRS enforcement budget, but the administration opposes efforts to turn “economic substance” into a statutory standard. They believe a legislative standard would be difficult to interpret and enforce and that determining “economic s
