IRS Tax Shelter Analysis
IRS Tax Shelter Analysis
- Institutional AuthorsInternal Revenue Service
- Subject Areas/Tax Topics
- Index Termsshelters, registrationreturns
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 2002-107 (7 original pages)
- Tax Analysts Electronic Citation2001 TNT 250-11
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OFFICE OF TAX SHELTER ANALYSIS (OTSA)
Report to Treasury -- December 18, 2001
o Creation of the Office of Tax Shelter Analysis
In February 2000, the Service announced the creation of the OTSA as part of the Large and mid-size Business (LMSB) Division of the newly restructured Internal Revenue Service (IRS). The formation was published in Announcement 2000-12, Internal Revenue Bulletin (IRB) 2000-12, on March, 20th. 2000. It was created as part of an agency- wide reorganization to transform the IRS from a geographic-base to a customer-focused agency, catering to the specialized needs of taxpayers.
OTSA is part of the Pre-Filing and Technical Guidance (PFTG) function in the LMSB division of the IRS. It is responsible for planning, coordinating and providing assistance to our examiners working abusive tax shelter issues. It also serves as a clearinghouse for information that comes to the attention of the Service relating to potentially improper tax shelter activity by corporate and non-corporate taxpayers.
o OTSA Operations
o OTSA Hotline
Pursuant to its function, as a clearinghouse for information that comes to the attention of the Service relating to potentially improper tax shelter activity by corporate and non-corporate taxpayers, OTSA maintains a Tax Shelter Hotline service. This Hotline provides a conduit to be used by persons wishing to submit information to the Service relating to particular tax shelter transactions.
Persons wishing to submit information relating to tax shatter transactions and activities may do so via mail, telephone, fax or e-mail, as follows:
Mailing Address:
Internal Revenue Service
Office of Tax Shelter Analysis
LM:PFT:OTSA
1111 Constitution Avenue, NW
Washington, DC 20224
Telephone Number: (202) 283-8740
Fax Number: (202) 283-8354
E-mail Address: irs.tax.shelter.hotline@irs.gov
A Senior Program Analyst evaluates information that is received by the Hotline. Information that requires compliance follow-up is forwarded to the appropriate Operating Division (EX: SB/SE) or LMSB Industry Director.
Hotline Statistics (as of Nov 30, 2001)
o 424 calls and e-mails received
o 179 calls and a-mails received, as follows:
o 122 Individuals
o 17 corporate/individuals
o 29 corporate
o 11 trust
o 245 calls and e-mails were received, pertaining to requests for other information.
Several notable tax shelters were identified through referrals made to the hotline:
Anonymous informant 15 LILO Investors -- $4.4 Billion
Investment. A SBSE Promoter with a significant number of
individual investors. 3 different Promoter Presentation packages
which are currently being considered for an Internal Revenue
Service Notice. Information Source for five Promoter Soft
Letters.
o Disclosure Statements (under IRS Regulations 1-6011.4T)
Corporate taxpayers are required to disclose their participation in "reportable transactions" by attaching a statement to their Income tax return. For the first taxable year a statement must also be filed with OTSA. A Senior Program Analyst reviews all Disclosure Statements. If needed, requests for assistance in evaluation are made to LMSB Senior Legal Counsel -- Corporate Tax Shelters.
Disclosure Statement Statistics:
Year 2000:
Disclosure statements received 51
Taxpayers 21
Listed Transactions 51
1999 tax saving reported $1.1 Billion
Listed Transactions tax savings reported $3.7 Billion
Total tax savings reported $3.7 Billion
Disclosure statements sent to Industry Directors 51
Listed Transaction Analysis:
Notice 2000-44 1
Revenue Ruling 99-14 (LILOs) 40
Revenue Ruling 90-105 10
Listed Transactions Disclosed 51
Disclosure Statement Statistics
Year 2001: (as of Nov 30, 2001)
Disclosure statements received 272
Taxpayers 95
Listed Transactions 72
2000 tax savings reported $3.5 Billion
Listed Transactions tax savings reported $4.4 Billion
Total tax savings reported $14.7 Billion
Disclosure statements sent to Industry Directors 157
Listed Transaction Analysts:
Notice 2000-60 3
Treasury Reg. 1.7701(1)-3 3
Notice 2001-17 33
Notice 2001-45 2
Revenue Ruling 90-105 10
Notice 98-5 1
Revenue Ruling 99-14 (LILOs) 20
Listed Transactions Disclosed 72
Other Transactions:
Sate Leaseback Tax Exempt Entity 60
Leveraged Lease 99
Unknown 41
Other Transactions Disclosed 200
o Tax Shelter Registrations
A set of regulations requires promoters to register tax shelters with the IRS under IRS Sections 6111(c) and 6111(d).
All registrations are reviewed upon receipt for completeness. Promoters are requested to provide missing information. Forms 8264 that are complete are issued a Tax Shelter Registration number. All Tax Shelter Registrations are entered into a database and a hard copy is filed. Issue Experts on a periodic basis classify all registrations.
Tax Shelter Registrations Statistics
3652 registrations
1960 Sec. 6111(c)
1692 Sec. 6111(d)
1773 Identified as leasing transactions
1363 Identified as Low Income Housing
516 Identified as Other
Information source for seven Promoter Soft Letters
o Tax Shelter Survey
OTSA conducted a survey of the LMSB field groups in October 2000 and identified the current in-process inventory.
413 issues
$16.2 Billion in Potential Tax
The survey assists in workload planning, issue coordination, and emerging issue identification.
o Tax Shelter Promoters
The Tax Shelter Committee (formerly Promoter Steering Committee) has approved the insurance of 28 letters to 22 different promoters.
The promoters Include;
Accounting firms 7
Bank/Security Firms 7
Other Promoters 14
Total Letters 28
The 28 letters covered the following issues:
Issues Number of Issues
Rev. Rul. 99-14 (LILO) 9
Notice 2000-44 (Son of Boss) 1
Rev. Rul. 90-105 3
Notice 99-59 (BOSS) 3
Notice 2000-51 (Guam Trust) 1
Notice 2000-60 (Stock Compensation) 1
IRC. SEC 302 Basis Shift 1
Salina Partnership (Variation) 1
Tax Shelter Registration 7
Notice 95-93 (Lease Strip) 1
Total 28
The Committee also has approved an investigation of twelve promoters for Failure to File Tax Shelter Registrations.
Sources of Information for Promoter/Investigations:
Type Number
Disclosure Statements 17
Tax Shelter Registrations 7
Tax Shelter Hotline 5
LMSB Examinations 9
Other 2
Total 40
o Communication and Education
IRS conducted 14 CPEs during FY2001 for all LMSB agents & managers. Issue specific training and briefings have been conducted an an ad hoc basis as needed. OTSA is developing an Audit Techniques Guide.
The IRS has participated in outreach meetings with internal and external stakeholders.
TEI National Conference Financial Executives Institute
TEI Mid Year Conference Federal Bar Association Taxation Section
TEI Local Chapter Meetings Pacific Northwest Trade Association
ABA IRS Conference US Counsel on International Business
GWU International Tax Conference 35 townhall meetings with IRS
AICPA National Association of Tax Practitioners
o Ongoing communications/liaisons have been established within the IRS Operating Divisions and Counsel.
o Field Assistance and issue Coordination
Technical Advisors (Issue Specialist) have been appointed for each listed transaction. The Technical Advisors provide assistance in identifying, developing and coordinating the various issues.
OTSA currently has a staff of five Senior Program Analysts who work closely with the Tax Shelters Issues Group in covering the following issues:
Corporate Owned Life Insurance (COLI)
Leasing
Lease Strip Transactions (Notice 95-53)
LILO (Rev. Rul. 99-14)
Section 351 Contingent Liability (Notice 2001-17)
Private Placement Insurance (Study)
2001-45 Basis Shift Transactions
Field assistance for other Tax Shelter Issues are provided by Technical Advisors belonging to groups other than the Tax Shelter Issue group. OTSA's staff also works with these Technical Advisors with respect to these issues.
OFFICE OF TAX SHELTER ANALYSIS
Briefing for Treasury -- December 18, 2001
Corporate Investor Disclosure Statements
Year 2000:
Disclosure statements received 51
Taxpayers 21
Listed Transactions 51
1999 tax savings reported $1.1 Billion
Listed Transactions tax savings reported $3.7 Billion
Total tax savings reported $3.7 Billion
Disclosure statements sent to Industry Directors 51
Listed Transaction Analysis:
Notice 2000-44 1
Revenue Ruling 99-14 (LILOs) 40
Revenue Ruling 90-105 10
Listed Transactions Disclosed 51
Year 2001: (As of 11/30/01)
Disclosure statements received 272
Taxpayers 95
Listed Transactions 72
2000 tax savings reported $3.2 Billion
Listed Transactions tax savings reported $4.4 Billion
Total tax savings reported $14.7 Billion
Listed Transaction Analysis:
Notice 2000-60 3
Treasury Reg. 1.7701(1)-3 3
Notice 2001-17 33
Notice 2001-45 2
Revenue Ruling 90-105 10
Notice 98-5 1
Revenue Ruling 99-14 (LILOs) 20
Listed Transactions Disclosed 72
Other Transactions:
Sale Leaseback Tax Exempt Entity 60
Leveraged Lease 99
Unknown 41
Transactions Disclosed 200
- Institutional AuthorsInternal Revenue Service
- Subject Areas/Tax Topics
- Index Termsshelters, registrationreturns
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 2002-107 (7 original pages)
- Tax Analysts Electronic Citation2001 TNT 250-11
