Federal Agents Target Illegal Tax-Shelter. The Justice Department said it expects to block twice as many promoters from selling illegal tax shelters this year compared with last year as the government works to reverse a decline in tax prosecutions.
The government blocked 28 promoters from selling illegal shelters in 2003 and expects to stop about 56 this year, in the process recovering millions in owed taxes. The number marks a reversal from 2000, when nobody was forced to quit marketing tax-avoidance techniques.
Actions against tax promoters often yield lists of clients who can be pursued for possible prosecution on tax-evasion charges. The government does not need to use an injunction to forcibly shut down a promoter who stops selling shelters after being contacted by the Internal Revenue Service.
Eileen J. O’Connor, assistant attorney general for the department’s tax division, said the Justice Department made gains in enforcing tax laws on several fronts in 2003.
“One of the obligations of government officials is not only to enforce the laws, but also to reassure people, to help maintain their faith in the institutions of government that the laws are, in fact, being enforced,” she said.
The department referred 1,129 cases for criminal prosecution in 2003, a 35 percent increase since 2000.
The IRS has asked Congress to add $393 million to its budget next year to pay for more than 5,000 additional employees on the enforcement staff. IRS Commissioner Mark Everson said he also wants Congress to increase penalties for people convicted of using illegal shelters.
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