Don't Rush to Judgment on Tax Shelter Legislation, TEI Urges Ways and Means Committee.

It would be premature for the House Committee on Ways and Means to include provisions relating to tax shelters in the bill scheduled for committee action by July 16, Tax Executives Institute said in a letter to committee chair Bill Archer. "Because the Treasury's proposals continue to raise as many questions as they answer," said TEI President Lester D. Ezrati, "we believe taking action at this time would constitute an unjustified and potentially counterproductive `rush to judgment.'"

On July 1, the Department of the Treasury released The Problem of Corporate Tax Shelters: Discussion, Analysis, and Legislative Proposals, a 188-page "white paper" that had been promised since the release of the Clinton Administration's FY 2000 Budget early this year. The white paper represents the Treasury Department's attempt to synthesize both testimony from congressional hearings and information from other sources. "TEI believes the paper's authors should be commended for their willingness to listen and respond positively to some of the criticisms leveled at the Administration's initial proposals," said Mr. Ezrati. "We are especially pleased that the Administration has moved away from its ill-advised proposal to impose a strict liability penalty."

Nevertheless, TEI believes that considerable analysis is required before legislative action can be taken. "The Treasury's proposal continues to be a work in progress," said Mr. Ezrati. "For example, although TEI agrees that there should be additional incentives for promoters, advisers, and taxpayers to meaningfully disclose select transactions, the Institute is very much concerned about the Treasury's new proposal to make senior corporate officers personally liable for misstatements on the disclosure form. Similarly, we are skeptical of the Treasury's proposal to impose the disclosure penalty...