Tax Shelter Enablers as Targets

At the Civil and Criminal Penalties Section meeting (at the larger ABA Tax Section May Meeting), a panel discussed tax crimes in a tax shelter context. Kevin Downing, a DOJ Tax attorney heavily involved in these prosecutions, announced that the Government is intent on prosecuting tax professionals serving as "enablers" (my word, not his) for tax cheating. Of course, clients who have been thus enabled are targets too. But, the Government gets maximum bang for its prosecution buck by targeting enablers because those prosecutions send a strong message to other potential enablers who might otherwise be tempted to enable beyond the confines of the law.

Mr. Downing also suggested that some clients might find it to their benefit to turn on their professional enablers. Assuming that the attorney or accountant is like the hub of a wheel having many spokes (clients), the clients by turning on the enabler could actually become very rich -- or richer -- from the whistleblower rewards on the taxes collected from all the other clients (the other spokes) who will get into the IRS's sights through the professional enablers. Of course, I would suspect that some special negotiation will be required with the Whisteblower Office because the client may not know the names of the other participating clients.