IRS Is Urged to Exempt Tax Credit Transactions from New Tax Shelter Penalties

摘要

Internal Revenue Service guidance on stiff new penalties for tax-exempt entities participating in potentially abusive tax shelters has prompted housing groups to ask for an exception for nonprofits involved in low-income housing tax credit projects, and, on a broader scale, for an exemption for tax credit transactions from the existing tax shelter rules. Notice 2006-65, which was published in the July 31 Internal Revenue Bulletin, addresses questions arising from the Tax Increase Prevention and Reconciliation Act (TIPRA) (H.R. 4297, Pub.L. 109-222). TIPRA imposed new excise taxes and penalties on tax-exempt entities participating in prohibited tax shelter transactions, which, under existing law and regulations, include confidential transactions and transactions with contractual protections.