OVERCOMING OVERDISCLOSURE: TOWARD TAX SHELTER DETECTION

Every year, thousands of taxpayers and their advisors are required to mail special disclosure forms that reveal details of potentially abusive tax strategies to the Office of Tax Shelter Analysis of the Internal Revenue Service in Ogden, UT. This mandatory disclosure regime has been widely praised as one of the government's most effective weapons in its war on tax shelters. In contrast to this largely positive portrayal, however, this article argues that the current tax shelter disclosure law is incomplete. After investigating the sources of overdisclosure, this article concludes that the tax law itself invites this response from distinct types of taxpayers and advisors. Conservative types overdisclose out of excessive caution, while aggressive types overdisclose in an attempt to avoid detection of abusive tax planning.