New York (March 26, 2003) - The American Institute of CPAs is increasing its efforts to clarify what defines a tax shelter and how CPAs should handle them.
The Institute has created a FAQ site [www.aicpa.org/members/div/tax/shelters_qa.asp] to help practitioners understand tax shelter issues and the Institute’s views on them. The site also helps describes how the AICPA is working to eliminate abusive transactions and clarifies its definition of an "abusive tax shelter." The AICPA plans to add to it over time on an as-needed basis.
But the Institute’s leader Barry Melancon realizes clarifying tax shelter issues requires more than just a Web site.
In a letter this week to AICPA members, Melancon explained that the most challenging problem regarding tax shelter issues is "devising a workable definition of abusive transactions for purposes of penalizing those involved with them. An agreed-upon definition has eluded Congress, the Treasury Department, the IRS, and tax practitioner groups for a number of years."
Melancon also noted that the AICPA’s definition and approach to abusive transactions differs from those proposed and under consideration by Congress. He added that the Institute is working with lawmakers and administrators to curtail abuses.
Melancon also made it clear that the AICPA is not opposed to all tax shelters. As he points out in his letter, "The overwhelming majority of the transactions entered into by taxpayers and the tax advice given by tax professionals with respect to such transactions is appropriate." He added that "many such 'shelters' serve the important purpose of delivering economic incentives to taxpayers as specifically provided for in the tax code."
Tax-advantaged retirement savings and education plans, life insurance on key business partners, and the development of manufacturing facilities and housing are among the many "acceptable shelters," according to the AICPA.
-- Electronic Accountant Newswire staff
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