SOUTH CAROLINA DEPARTMENT OF REVENUE
Public Affairs Office
Phone (803) 898-5464
Contact: Danny Brazell
Fax (803) 898-5446
FOR IMMEDIATE RELEASE
Aug. 11, 2004
Abusive tax shelter amnesty program ends Sept. 1
Taxpayers attempting to hide taxable income by participating in “abusive” tax shelters have just two weeks to contact the South Carolina Department of Revenue and come clean. Those that contact the Department by midnight Sept. 1 can avoid steep tax penalties and head off possible criminal fraud charges.
The amnesty applies to taxpayers participating in illegal tax shelters such as bond and option strategies, frequently referred to as “Son of Boss” tax shelters, and similar schemes. Some of the other tax shelters identified as illegal by the Internal Revenue Service are COBRA, SILO, LILO, PICO, CDS, FLIP, BOSS, BLIPS, CARDS, GIFT, OPIS, SOS and SC-2. The Department of Revenue and IRS are examining other tax shelters as well. The complete list of shelters determined by the revenue agencies to be abusive is available at http://irs.gov/businesses/corporations/article/0,,id=120633.00.html.
The Department of Revenue will begin assessing appropriate penalties to taxpayers who fail to come forward by Sept. 1 and disclose their participation in illegal tax shelters. These taxpayers also could face civil fraud penalties once the Department of Revenue determines the extent of their involvement.
The Department of Revenue will intensify its investigation of promoters of illegal tax shelters to reign in their misrepresentation of these abusive shelters to taxpayers, a practice which Department of Revenue Director Burnie Maybank says, “…lines the pockets of out-of-state promoters with millions of dollars in commissions…”
It has been estimated by a national tax group that corporate participation in illegal tax shelters alone cost states more than $80 million a year in revenue losses. The IRS has recently cracked down on the use of abusive tax shelters and offered a similar amnesty program earlier this summer.
For information on South Carolina’s abusive tax shelter amnesty program, or to seek amnesty, call the Department of Revenue at (803) 898-5604.