I was chatting with the Web's Tax Mama, Eva Rosenberg, this afternoon and one of our topics was questionable tax tactics.
Then I opened up my e-mail box and there was a release from the IRS on a $76 million penalty settlement agreement the IRS has reached with a Texas-based law firm for, quoting the IRS here, its "promotion of abusive and fraudulent tax shelters and violation of the tax law concerning tax shelter registration and maintenance."
As Eva had just noted not half an hour earlier, "You don't ever want an IRS press release with your name on it." At least not in this context.
The firm is Jenkens & Gilchrist, which in the wake of the nonprosecution agreement, is closing shop. That means the shuttering of offices, according to its Web site (which you can check out yourself here, but you probably better hurry before it is taken down), in Austin, Dallas, Houston and San Antonio. TaxProf has additional details on the firm, as well as links to news coverage of the tax deal.
You might not know the firm, but perhaps you've heard of some of the shelters they pitched to the ultra wealthy and which generated more than
- COBRA, Currency Options Bring Reward Alternatives
- BEST, Short Option/Basis Enhancing Securities Transaction
- BLISS, Basis Leveraged Investment Swap Spreads
- OPS, Option Partnership Strategy
- BEDS, Basis Enhancing Derivatives Structure
- BOSS, Bond & Option Sale Strategy
- HOMER, Hedge Option Monetization of Economic Remainders
- BART, Basis Adjustment Remainder Trusts
Guess lotsa folks are now saying, D'oh!
And that group includes more than J&G lawyers and staff. The IRS estimates that 1,400 investors are affected by the firm’s advice and will owe interest and penalties on their underpayment of tax.
Seeking appropriate shelter: In case, as the April 17 tax due date nears, you're looking for some ways to trim your tax bill, remember that old cliché: If it's too good to be true, it probably is. That goes double when it comes to tax techniques.
And if your 2006 bill has you contemplating ways to dramatically reduce it next year, check out this story on how to avoid buying an abusive tax shelter. And this item on picking a tax professional who won't steer you down the wrong, and very costly, path.
The Simpsons File: You can check out the instances where Bart uttered "ay carumba" or Homer had a head-slapping "D'oh!" moment, along with other episode factoids on everybody's favorite Springfield family, here.