Washington (Oct. 22, 2003) -- It's about time for tax shelter hustlers to find other work, Senate Finance Committee chairman Sen. Chuck Grassley announced at the beginning of a hearing on tax shelter abuse.
In his opening statement before the Committee, Grassley said his guess is that "the first tax shelter was created before the ink was dry on the first tax code. It's a continual and constant effort to fight these shelters."
The hearing, said Grassley, will revisit Enron and similar, equally troubling accounts. "Particularly gripping will be the inside account of the abuses in the leasing industry. This hearing will show that Enron wasn't an exception and that Enron didn't act alone. "
"Enron wasn't the lonely Maytag repairman when it comes to creating tax shelters and buying tax shelters," he said. "Enron had a lot of help from investment bankers, law firms and accounting firms. And these tax shelter hucksters sold tax shelters not only to Enron, but to other companies as well -- and they continue to do so today."
An IRS database on shelter transactions, discussed in testimony from the General Accounting Office, suggests the tax revenue lost from known shelters to be $33 billion since 1993. The same database estimated losses from similar but unknown transactions could total another $52 billion.
Robert V. Lally, a former partner at Deloitte & Touche, said in his prepared testimony that the growth of shelters began when firms strayed from offering tailored tax advice and started developing tax products, marketed and sold on commission.
"I have seen standards of practice degrade over time," he said. "There was a social and professional contract which was very powerful. I sense that this has changed."
Grassley said his hope is that the Committee's continued oversight "will focus the government's work and ensure this remains a top priority. Finally, I say to the hucksters, it's time to find an honest living. The Finance Committee on a bipartisan basis remains committed to addressing the issue of tax shelters and particularly promoters. We'll continue to press in this area and to ensure that the government continues to realize results in putting the hucksters out of business."
-- WebCPA staff
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