Whats the difference between legitimate and illegitimate tax shelters?
Many people take advantage of legitimate tax shelters, such as Roth IRA accounts, deductions for home mortgage interest or small business R&D investments. These are deductions sanctioned by Congress, often for social purposes. Illegitimate tax shelters, however, often arise when sections of the tax code, or multiple sections of the code, are used for purposes not originally intended by Congress or the IRS. In that way, illegitimate shelters may conform “technically” with the code, and yet violate the “spirit” of the code. As the tax code has become more and more complex, “technical” manipulation of the code has become more and more problematic.
