Recent Developments in the Tax Shelter Area

The ongoing enforcement effort against abusive tax shelters has taken several turns in the past few months. Taxpayers and practitioners who have shelter issues need to be aware of a number of recent developments.

Legislative Developments. First, as of this date (mid-November) anti-tax shelter legislation appears to have stalled in Congress. The Senate has passed a comprehensive set of disclosure and penalty provisions, including a codification of the economic substance doctrine that is estimated to raise nearly $14 billion of revenue alone. But the economic substance provision continues to be controversial, and the shelter bill appears to be caught up in House-side wrangling over other tax legislation. To focus more attention on the shelter issue, several days' worth of hearings were held on Capitol Hill this fall. The Senate Finance Committee held a hearing in October at which Government, private sector, and so-called "whistleblower" witnesses testified about both