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To: regli who wrote (33547)	7/12/2005 2:46:51 PM
From: RealMuLan	Read Replies (2) \| Respond to of 116555

[This should help the US budget deficit somewhat<G>]--"US IRS recovers $3.7 bln from shelter settlement" Mon Jul 11, 2005 7:51 PM ET By Mark Felsenthal WASHINGTON, July 11 (Reuters) - The U.S. Internal Revenue Service has recovered more than $3.7 billion in unpaid taxes, interest and penalties from users of the illegal "Son of Boss" tax shelter, the agency said on Monday. The IRS deemed Son of Boss abusive in 2000 and has said it resulted in more than $6 billion in estimated understatements of taxes due from some 1,800 taxpayers. These were mostly wealthy individuals such as corporate executives seeking to shelter huge gains from business or stock sales during the late 1990s market boom. "We are still processing a number of the more complicated elections and expect the final tally to be near $4 billion," said IRS Commissioner Mark Everson in a statement. To date, more than 1,200 people have taken advantage of the settlement offer. About 750 taxpayers passed on the settlement. "The IRS will continue to pursue these cases through audits and the normal litigation process," the agency said. The first cases are expected to go on trial this fall. Son of Boss was a variant of another illegal tax shelter called the Bond and Options Sales Strategy. It used financial products, such as currency options and government securities, to create what the IRS called artificial tax losses that were used to offset big profits from asset sales. Under the terms of the settlement, participants were required to concede their entire claimed tax loss and pay a 10 to 20 percent penalty. In exchange, they were allowed to deduct part of their out-of-pocket transaction costs, which generally ran to 6 to 7 percent of the claimed tax loss. The IRS also said it had received strong turnout for a settlement offer to companies and executives who participated in a tax avoidance scheme involving the transfer of stock options or restricted stock to family controlled entities. The IRS identified 114 executives and 42 companies who participated in abusive transactions. Of these, 80 individuals and 33 companies participated in the settlement. The settlement required executives to include 100 percent of their stock option compensation in income, pay interest, income and employment taxes, and a 10 percent penalty. Michigan Democratic Sen. Carl Levin, who investigated tax shelters sold by accounting and law firms and banks, said this shelter led to nearly $1 billion in unreported taxable income. © Reuters 2005. All Rights Reserved. today.reuters.com