WASHINGTON (AP) — The Clinton administration is intent on pursuing tougher penalties and increased scrutiny of corporate tax shelters that sidestep billions of dollars in taxes, a top Treasury Department official said.
“Our aim is not merely to protect revenues but to protect those taxpayers who are willing to pay their fair share,” Deputy Treasury Secretary Lawrence Summers told a conference of the Tax Executives Institute, comprising 5,000 tax specialists at U.S. companies.
Beyond Cash Donations: How New Forms of Giving Are Transforming Not-for-Profit Accounting
Evolving Funding Landscape for Not-for-Profits Not-for-profit organizations are being asked to do more with less,…
Learn More
Summers said the Treasury Department will strive for a “culture of compliance” focusing on both the peddlers of tax shelters — accounting firms, investment bankers and consultants — and the companies that use them.
The Treasury Department plans as early as next month to release a major study outlining the scope of the tax shelter problem. Estimates of losses in federal revenue are sketchy, but a single example cited by Summers was pegged at $30 billion over 10 years.
Generally speaking, a tax shelter is a financial arrangement aimed mainly at escaping taxes with no other economic or business purpose. In his fiscal 2000 budget plan, President Clinton proposed to eliminate several specific shelters, but Summers said the administration won’t stop there.
To create “real financial risks” for people who devise and use tax shelters, Summers said, the administration wants Congress to approve a 25 percent excise tax on promoter and lawyer fees. In addition, an unspecified excise tax would be imposed on contingency fees, sometimes used when part of the deal depends upon a favorable ruling by the Internal Revenue Service.
Without such deterrents, Summers said, “The temptation for some taxpayers to play the audit lottery is just too great.”
