FIVE PROMOTERS are being investigated by the IRS for failure to register transactions the government considers corporate tax shelters
Investment bankers and others who try to persuade corporations to enter into transactions to reduce taxes must register the transactions with the IRS. Three things must be true about a transaction before it must be registered. First, it must have “avoidance or evasion” of federal income taxes as a “significant purpose.” Second, the transaction must be offered “under conditions of confidentiality.” Third, the investment bankers must expect fees of more than $100,000. Registration is required for transactions offered to corporations after February 28, 2000. The forms must be filed with the IRS before any interests in the transaction are offered for sale.
The IRS said 1,268 transactions have been registered as corporate tax shelters in the past year.