October 31, 2005 – The IRS has released information in Announcement 2005-80 on a settlement reached with taxpayers participating in a variety of tax shelter schemes, the purpose of which is to avoid taxation. The tax shelters listed include certain abusive Roth IRA transactions.
The announcement notes that, in general, the deal struck by the IRS allows tax shelter participants to settle with the IRS for penalties that are roughly one-fourth to one-half of the amounts the IRS would normally seek. Such taxpayers are, however, required to pay 100 percent of applicable taxes and interest. Promoters, partners and other persons related to the commercial offering of such tax shelters are not eligible for the settlement deal, the IRS notes.
Announcement 2005-80 may be accessed at http://www.irs.ustreas.gov/pub/irs-drop/a-05-80.pdf.