Comments on: Former Jenkens & Gilchrist Tax Attorneys Indicted

By: David Cay Johnston

David Cay Johnston — Tue, 16 Jun 2009 10:30:07 +0000

As the reporter who earned his Pulitzer exposing tax shelters back then in The New York Times and a best-selling book on them, I would love to talk to DH Mahey for the column I now write for Tax Notes. davidcay@me.com is my email.

By: DH Mahey

DH Mahey — Wed, 10 Jun 2009 15:30:14 +0000

It’s easy to look back and say how can people be so greedy. I think one has to realize that the environment – back then, for those that were doing something other than tax – was much different. Tax shelters were as common and acceptable as a candy bar in a vending machine. First, all the firms – accounting, law and investment banks were selling them or involved in them. If you sold your company you were solicited by a number of blue blooded firms to shelter your tax. If you had expiring capital losses and were a tax director of a company you used a tax shelter or explained why not to your CFO. Everybody was doing it. If you were a partner at one of these firms you had to sell BLIPS, BOSS, HOMER etc. or else you probably did not remain a partner for long and guess what, there were a dozen other guys just waiting to be given a chance to sell.

As someone who was knee deep in all of this I can tell you that I never participated in any tax shelter by sheer luck! It was a different time and different mind set. It wasn’t about screwing the government as much as using tax loop holes to your advantage. When you have a firm like Sidley and Austin giving you a “should opinion” what are you gonna say.

Also as easy as it is to point a finger today where was the Treasury and the IRS back then, I mean let’s face it everyone knew what was happening I only wish they had been more forceful in going after firms back then or stopping them. Its interesting that we are going after tax shelter promoters with criminal charges but those that sold subprime loans or CDC/CDS that almost brought the collapse of the worlds financial markets are reaping those benefits today as if nothing happened.

By: Urbie

Urbie — Wed, 10 Jun 2009 14:53:00 +0000

Us free-market types like to think people are inherently rational and that business people will just make the calculations, then do whatever maximizes their after-tax income. But a lot of people have this fanatical anti-tax attitude and will foam at the mouth at the prospect of paying anything at all to Uncle Sam. So they do all kinds of irrational things (or at least waste a lot of time contemplating them) to avoid/evade taxes, instead of just sucking it up and focusing on what they do best: whatever it is their company does as its core business. My first tech-writing client got all wound up about various minor state tax hikes for this and that, that he spent quite a bit of effort investigating how much it would cost to pack up and move his plant across the state line (into another Northeast state that had equally high taxes and stupid bureaucracy), before eventually deciding to stay put. When not at work, this guy and his buddies got all lathered up about the 10% “luxury tax” on boats above a certain price, when they had plenty of money to pay it. If the price of the boat had gone up by 10%, they wouldn’t have batted an eye, because when you’ve got a certain level of wealth, who cares what your boat costs? But because the extra 10% was a TAX, it became OMG, WTF, this is an outrage, we won’t pay it, and they resolved to get by with the old boat for another year. This is the mentality of the tax-shelter fanatic. (Not that I’m a big fan of paying taxes, etc., usual disclaimers apply.)

By: Roth & Company, P.C.

Roth & Company, P.C. — Wed, 10 Jun 2009 13:46:55 +0000

Is backdating the fatal flaw for Daugerdas?…

Looking over the yesterday’s tax shelter indictment of Paul Daugerdas and others, you can see opportunities for the defendants to……

By: Carol Fritz

Carol Fritz — Wed, 10 Jun 2009 13:23:02 +0000

Always fascinates me how greedy people come up with these nefarious schemes when the same energy and brain power could have gone into some thing positive.

I take it the IRS is proceeding civilly against the taxpayers that bought these tax shelters as well??

By: Charlie

Charlie — Wed, 10 Jun 2009 12:42:46 +0000

It’s guy like this that give the profession a black eye.

And people ask me how I can sleep at night.