IRS Offers Deal for Some Taxpayers Who Used the Son of Boss Shelter
The Internal Revenue Service said Wednesday that taxpayers who used a tax shelter known as Son of Boss, which was marketed aggressively beginning in the late 1990s, could avoid some penalties if they came forward by June 21.
IRS Commissioner Mark Everson said in an interview that the IRS knew or suspected that taxpayers used the shelter in 5,000 instances to create a large, artificial loss so as to offset an unusual, one-time gain such as the sale of a business or the exercising of stock options. The loss canceled out the gain and taxes owed.
The shelters were used to evade a collective $6 billion in taxes, the IRS said.
Taxpayers who come forward must pay taxes due and interest owed. Taxpayers who used only the Son of Boss transaction have to pay a 10% penalty.
The IRS said it would aggressively pursue taxpayers who didn’t step forward.
Those taxpayers can take the IRS to court, but IRS Chief Counsel Donald Korb warned that “taxpayers should not expect to settle court cases on terms more favorable than those offered in the IRS settlement initiative.”
Son of Boss is a spinoff of another tax shelter known as BOSS, an acronym for Bond and Option Sales Strategy.
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