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.
Tax Shelter Updates
Penalties and Interest
For questions about penalties and interest, please see Pub-103, Penalties and Interest for Illinois Taxes.