By Peter Elkind, ProPublica
June 20, 2022
For the past six years, government officials have tried ever harder to kill a type of tax avoidance scheme that the Internal Revenue Service has branded “abusive” and among “the worst of the worst tax scams.”
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The IRS has pursued tens of thousands of audits and warned of hefty penalties facing anyone who exploits it.
The Justice Department has targeted top promoters of what it calls “fraudulent” deals with criminal charges and civil lawsuits, yielding several guilty pleas and a civil settlement. In Congress, Democrats and Republicans have united to sponsor legislation to abolish the practice.
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But the industry has fought back with a coterie of lobbyists, including a onetime member of Congress long viewed as a liberal lion, Henry Waxman. The battle shows how even on those rare occasions when both parties agree to take action, well-funded interests can frustrate a solution.
The result: The use of the scheme continues unabated. Along the way it has cost the U.S. Treasury billions in lost taxes, according to the IRS.
“There is a tax shelter gold mine here, and they’re fighting very hard to protect it,” Oregon Sen. Ron Wyden, chair of the Senate Finance Committee, said. “There are enormous sums of money to be made as long as the number of transactions keeps increasing. This is…
