Seeking Shelter: Pondering the Potential and Problems

As federal income tax rates drop and the individual alternative minimum tax (AMT) decreases or disappears, the appeal of and interest in tax shelters appears to be diminishing. When one adds the target marketing of shelters to the mix, it's easy to understand why many practitioners find themselves with little or no experience or exposure to the potential and the problems of tax shelters. Nonetheless, increased IRS scrutiny of investments that allow for tax avoidance, and at times tax evasion continues. This heightened level of attention generates investigations that focus on whether or not an offering is an abusive tax shelter. The IRS does appear to be moving into an environment where it may face a less hostile Congress, which may somewhat reduce budget pressure. Budgets and personnel are not likely to return to their former numbers anytime soon, but the IRS has already shown some ability to do more with less and improved technology should bolster that effort.