Injunctions Vs. Tax Promoters to Double

MARY DALRYMPLE, AP Tax Writer
AP Online
04-06-2004
Dateline: WASHINGTON
The Justice Department said Tuesday it expects to block twice as many promoters from selling illegal tax shelters this year compared with last year, as the government works to reverse a decline in tax prosecutions.

The government blocked 28 promoters from selling illegal shelters in 2003 and expects to stop roughly 56 this year, in the process recovering millions in owed taxes.

The number marks a reversal from 2000, when nobody was forced to quit marketing tax avoidance techniques on the Internet, through seminars or by other means.

Actions against tax promoters often yield lists of clients that can be pursued for possible prosecution on tax evasion charges. The government does not need to use an injunction to forcibly shut down a promoter who stops selling shelters after being contacted by the Internal Revenue Service.

Eileen J. O'Connor, assistant attorney general for the department's tax division, said the Justice Department made gains in enforcing tax laws on several fronts in 2003.

"One of the obligations of government officials is not only to enforce the laws but also to reassure people, to help maintain their faith in the institutions of government, that the laws are in fact being enforced," she said.

The department referred 1,129 cases for criminal prosecution in 2003, a 35 percent increase since 2000.

The IRS has asked Congress to add $393 million to its budget next year to pay for more than 5,000 additional employees on the enforcement staff.

IRS Commissioner Mark Everson said he also wants Congress to increase penalties for people convicted of using illegal shelters.

Chris Rizek, who once served as a trial attorney at the Justice Department's tax division and now works as a tax attorney at Caplin & Drysdale in Washington, said the government has started to reverse the decline in tax law enforcement that began in the late 1990s.

"There was a huge dip. They are coming back from that, absolutely," he said "But I think most people who remember tax enforcement when it was fully funded and something to be feared still think they've got a ways to go."

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