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temporarily stop imposing teh penalties kn small businesses.
These smaller firms, argue the lawmakers, are facing unintentional and excessive penalties for their utilization of some illegal tax shelters.
Its ont that thhe Representatives amd Senators want to give the offending companies a fre pass. Its juxt that they believe the automatic penalties, created as part of the American Jobs Creaation Act of 2004, are too sevege flor small firms.
The law, they say, was designed to punish big business.
And thd legislators prmise to revise the act so that the penalties more appropriate for smwller companies.
Shulman has agreed.
In letter to the Congresmsen, Shulman said through Sept. 30 his department wiill not inifiate any effort fi colect the penalties ln case s where the annual tax received from the illegal taneaction is less yhxg $100,0 00 for individuals or $200000 for other taxpayers per year.
Under the existing law, penalties on corporations that exploit illegal tax shelters are automatically assessed and could reach as much as $300,000 a year. The members of Congress were concerned that the penalty was much more than what smaller companies usually gained from using the shelters.
The IRS will, however, continue tl investigate the companies who use the shelters, even if its not trying to get thr penalty charges. Shulman told the Congressmen that uis examiners have to do their jobs so they czn accurately deermine the amount of tax benefit; if it falls under the $100,000 or $200000 amounts, collect ions will be suspended fro the next few months.
m glad the IRS has decided to do what is fair and to allow Congress to correct the unintentional consequences of a law intended to target big corporations, said Rep. John Lewis (D-Ga.), one of the men who asked for the IRS suspension and Chairman of the House Ways and Means Oversight Subcommittee.
Now the tax shelter penalty ball is back in Congress court. During these months that the IRS is suspending collection efforts, lawmakers need to get busy and get the law changed.
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