GAO Report: Tax Shelters Draining Revenues

Tax shelters provided by accounting firms or external auditors potentially siphoned an aggregate $129 billion in revenue from U.S. coffers over the period from 1998 to 2003, according to a report from the Government Accountability Office. According to the GAO, some 207 Fortune 500 companies, or about 40 percent of the companies in that category, purchased tax shelters from their auditor or from CPA firms, resulting in a potential revenue loss of $56.6 billion. Meanwhile, tax shelter transactions involving the auditor for 61 Fortune 500 companies sidestepped paying about $3.4 billion in taxes between 1998 and 2003, but as a result of the shelter received $1.8 billion in federal tax benefits. The study, which calculated revenue loss from tax shelters purchased by both Fortune 500 corporations and individuals, was launched at the behest of Sen. Carl Levin, D-Mich., the ranking Democrat on the Senate Permanent Subcommittee on Investigations. The GAO noted, however, that the study included only those transactions known to the Internal Revenue Service, and said that its estimates were imprecise because some of the shelters may not be abusive and some transactions may have been counted more than once. The names of the companies and individuals purchasing tax shelters were not identified.