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

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.’

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