Lawmakers want IRS to suspend tax shelter penalty
Some small businesses are being hit with big fines for not disclosing the use of questionable tax shelters to the IRS, an unintended consequence of a law aimed at corporations that use the shelters to avoid taxes.
The penalties, which can reach $300,000 a year, are automatic under the law. But a bipartisan group of lawmakers last week asked the IRS to temporarily stop imposing them while they work on legislation to reduce them.
A 2004 law setting up the automatic penalties was designed to stop large corporations from exploiting tax shelters known to be illegal. But the lawmakers said some small businesses have been penalized for using the tax shelters to reap tax savings that are smaller than the penalties.
The IRS said it is reviewing the lawmakers' request.
Source: SmartPros
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LAST UPDATED 7/1/2009