IRS offers deal on questionable tax shelters

The Internal Revenue Service said Wednesday that it was prepared to offer settlements to some 45 corporations if they agreed to end questionable tax shelter practices.

IRS Commissioner Doug Shulman said the agency aims to end transactions that have allowed corporations, including many of the nation’s top banks, to gain billions in tax deferrals. He did not name the corporations.

Letters were sent out Wednesday giving the corporations 30 days to make a decision on whether to accept the terms of the offer.

Shulman said the transactions, called lease-in/lease-out (LILO) and sale-in/lease-out (SILO), involve complex arrangements in which large corporations lease or purchase large assets such as foreign rail systems or sewer systems and then lease them back to the original owner.

The 45 companies are engaged in more than 1,000 of these LILO and SILO transactions. The tax agency said it had won three cases against corporations involved in the transactions, giving others an incentive to agree to the settlement offer.

It said cases would proceed against corporations that decided not to participate in the settlement.