IRS OFFERS SETTLEMENT FOR SOB TAX SHELTER


J

John H. Fisher

IR-2004-64, May 5, 2004

IRS OFFERS SETTLEMENT FOR SON OF BOSS TAX SHELTER

WASHINGTON -The Internal Revenue Service announced today that taxpayers
who invested in an abusive tax shelter commonly known as "Son of Boss"
will have until June 21 to accept an IRS settlement offer to resolve their
tax issues.

"These transactions were developed and marketed by an interlocking network
of commercial interests, including leading law firms, accounting firms and
investment banks," said IRS Commissioner Mark W. Everson. "Son of Boss
deals had only one purpose - the elimination of tax. We encourage
investors in these transactions to settle these disputes now to avoid more
severe consequences later."

The IRS is already aware of several thousand transactions involving an
understatement of tax in excess of $6 billion, not including interest and
penalties. Many of these transactions generated tax losses of between $10
million and $50 million.

Under the terms of the agreement, eligible taxpayers must concede 100
percent of the claimed tax losses, must pay all applicable interest and
must accept the imposition of a penalty unless they had previously
disclosed their participation in the transaction. Participating taxpayers
will be allowed to deduct as a loss their out of pocket transaction costs,
typically promoter and professional fees.

Taxpayers not participating in the settlement will receive a statutory
notice of deficiency (90 day letter) disallowing all losses and out of
pocket costs and will be assessed maximum applicable penalties. To achieve
uniformity and enhance overall compliance with the tax laws, taxpayers
will not be afforded the traditional administrative Appeals process.

"We are taking this unusual step because of the severity of the abuse,"
Everson said. "Anyone who doesn't come forward can still take the IRS to
court. In such an instance, the government will vigorously pursue the full
tax due, applicable interest and the maximum penalty."

"Taxpayers should not expect to settle court cases on terms more favorable
than those offered in the IRS settlement initiative," added IRS Chief
Counsel Donald Korb. "The IRS will work closely with the Justice
Department on Son of Boss cases."

Son of Boss was aggressively marketed in the late 1990s and 2000 to
companies and high net-worth individuals. In August 2000, the IRS issued
Notice 2000-44 declaring the transactions abusive and requiring promoters
to maintain a list of investors.

The IRS continues to become aware of many Son of Boss transactions through
investor lists obtained in IRS promoter investigations and successful
summons enforcement actions by the Department of Justice. The IRS has
learned of at least 500 previously undisclosed transactions in the last 90
days alone.

IRS Announcement 2004-46 outlines the details of the settlement offer. It
is on IRS.gov and will be published in Internal Revenue Bulletin 2004-21,
dated May 24, 2004.

"Jack" - John H. Fisher - (e-mail address removed)
Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ
My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html

Where Ignorance is bliss, 'tis folly to be wise!=:)
 
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V

Vic Dura

RE: IRS OFFERS SETTLEMENT FOR SOB
TAX said:
IRS OFFERS SETTLEMENT FOR SON OF BOSS TAX SHELTER
I can't help but ask: what was the SoB tax shelter? How was
it purported to work?
 
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