On Dec. 21, 2001, the IRS started the 120-day "window of opportunity" for taxpayers to voluntarily come forward and disclose tax shelters and other questionable items reported on their tax returns. As of April 5, the IRS has received disclosures from over 250 taxpayers that involve 458 tax shelter transactions with reported deductions and losses of over $8.5 billion through the initiative. The IRS expects to receive many more disclosures as the deadline approaches.

The disclosure initiative is part of the effort by the IRS and the Treasury Department to identify and shut down tax shelter activity. The IRS is taking this step because information obtained through disclosures helps the IRS more readily identify tax shelter promoters who have not registered and find other taxpayers who have not disclosed their participation in a tax shelter.

"There is still time for taxpayers to voluntarily come forward and disclose their participation in abusive tax shelters and questionable transactions. After April 23, the IRS will continue its aggressive pursuit of abusive tax shelters and other questionable transactions and impose penalties  when appropriate," said Larry Langdon, Commissioner, Large and Mid-Size Business Division.

This disclosure initiative will not apply to taxpayers involved in fraud, criminal conduct, concealment of a foreign financial account or trust, or treatment of personal expenses as deductible business expenses.

Read Tax Shelter Disclosure: To Tell or Not to Tell? for more information.

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