IRS halts tax shelter penalties for SMEs

The US Internal Revenue Service has announced it will suspend imposing penalties on SMEs who invested in tax shelter transactions.

The move is designed to allow Congress time to work on legislation which would help businesses who face penalties out of proportion to any tax benefit received from tax shelters, according to tax-news.com

A lobby group wrote to the IRS Commissioner Doug Shulman requesting assistance while Congress moves to legislate on the matter.

“I’m pleased the IRS complied with our request so that Congress can do its part to ensure the tax code treats small businesses fairly,” said Max Baucus, chairman of the senate finance committee.

In response to the letter, Shulman said: 'I am concerned that because the current statute applies uniformly without exceptions and without regard to the amount of tax in question, some taxpayers are caught in a penalty regime that the legislation did not intend.'

Further Reading:

IRS extends offshore reporting deadline

IRS triumphs in transfer pricing dispute