• New Excise Taxes and Disclosure Rules With Respect to Potentially Abusive Tax Shelter Transactions Involving Tax-Exempt Entities
  • July 25, 2006 | Authors: Susan P. Serota; Peter J. Hunt; Jeffery L. Yablon
  • Law Firms: Pillsbury Winthrop Shaw Pittman LLP - New York Office ; Pillsbury Winthrop Shaw Pittman LLP - Washington Office
  • On May 17, 2006, Congress enacted the Tax Increase Prevention and Reconciliation Act of 2005 ("TIPRA"), which includes new excise taxes and disclosure rules targeting potentially abusive tax shelter transactions to which a tax-exempt entity is a party. TIPRA creates a new section 4965 and amends sections 6033(a)(2), 6011(g) and 6652(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code"). The TIPRA amendments have broad application to tax-exempt entities and their managers; entities that may be affected by the new provision include, but are not limited to, charities, state and local governments, qualified pension plans, individual retirement accounts, health savings accounts, and similar tax-favored savings arrangements. The manager of these entities, and in some cases the entities themselves, may be subject to excise taxes if the entity is a party to a prohibited tax shelter transaction.