Illinois Department of Revenue
Abusive Shelters

Abusive Tax Avoidance Transactions


Illinois has joined the IRS and 48 states in a cooperative effort to identify participants and promoters of potentially abusive tax avoidance transactions, commonly known as abusive tax shelters. As part of this effort, Illinois has:

  • Enacted new penalties and additional reporting requirements for both use and promotion of abusive tax shelters;
  • Assembled and trained a team of auditors and lawyers dedicated to uncovering abusive tax shelters;
  • Entered into agreements to exchange information with the IRS and various other states to create and maintain a database of taxpayers participating in abusive tax shelter activity, and
  • Agreed to work with the IRS and other states in sharing client lists from promoters who market abusive tax shelters.
  • Enacted a Voluntary Compliance Program (VCP) to give taxpayers an opportunity to file and pay any tax liability from participating in a tax avoidance transaction before the new penalties related to abusive tax shelters go into effect.

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