Max Baucus: “last year, the Senate passed significant legislation aimed at shutting down tax shelters. We ramped up disclosure…”

“last year, the Senate passed significant legislation aimed at shutting down tax shelters. We ramped up disclosure requirements that make it easier for IRS to find those who promoted and invested in these deals. We greatly increased penalties. We made law firms and accounting firms responsible for their part in perpetuating this distasteful business. Another thing we did was to take a break on interest expense away from participants in listed transactions and those who fail to disclose a reportable transaction. Usually, if the IRS audits your tax return and doesn't tell you about any adjustments to your tax bill within 18 months after the return is filed, the interest on that tax bill stops. It stops until the IRS does tell you what you owe. It is called ``the 18 month interest suspension rule'' and became law so taxpayers wouldn't have to pay excessive interest if the IRS took a long time to figure out what they owed. But, people who get involved with tax shelters play hide and seek with the IRS. They hope the game lasts until the time for auditing a tax return has passed. This means that the IRS often doesn't know a taxpayer has bought into a tax shelter until well after 18 months has gone by. And, this problem is made even worse by those who sell the shelters. Promoters are supposed to keep a list of those who buy their shelters. The IRS can ask for the list--it's one way the IRS can find those who get into these bad deals.…”