The IRS Under Siege

This is Chapter 1 of Confidence Games (MIT, 2014). Confidence Games provides an account of the wave of tax shelters that occurred at the turn of the twenty-first century. During this period, some of America’s most prominent law and accounting firms created and marketed products that enabled the very rich—including newly minted dot-com millionaires—to avoid paying their share of taxes by claiming benefits not recognized by law. These abusive tax shelters bore names like BOSS, BLIPS, and COBRA and were developed by such prestigious firms as KPMG, Ernst & Young, BDO Seidman, the now defunct Jenkens & Gilchrist and Brown & Wood, now merged into Sidley Austin. These shelters brought in hundreds of millions of dollars in fees from clients and deprived the U.S. Treasury of billions in revenue before the IRS and Justice Department stepped in with civil penalties and criminal prosecutions targeting the professionals and firms involved. As we suggest, the decade of tax shelter activity between the mid-1990s and mid-2000s is the most serious episode of professional misconduct in the history of the American bar. Chapter 1, available here, describes how an overstretched and under-resourced IRS came under attack in the late 1990’s by anti-tax and anti-government members of Congress. In the chapters that follow, we describe the heightened competition for professional services, the relaxation of tax practitioner norms against aggressive advice, and the creation of complex financial instruments that made abusive shelters harder to detect. By 2004, the tax shelter boom was over, leaving failed firms, disgraced professionals, and prison sentences in its wake. A central theme that we explore in the book is the role of organizational forces in abetting wrongdoing. In the conclusion, we assess the regulatory responses that ultimately put an end to this wave of shelters. We also consider strategies and approaches that might serve to strengthen professional norms governing tax advice. The rise and fall of the tax shelter industry offers a cautionary tale that we believe remains highly relevant today, as lawyers and accountants continue to face intense competitive pressure and regulators continue to struggle to keep pace with accelerating financial risk and innovation

Sheltering Lawyers: The Organized Tax Bar and the Tax Shelter Industry

This Article considers the role of tax lawyers in the corporate tax shelter controversy. In the mid-1990s, a large market emerged in abusive tax shelters, which cost the Treasury tens of billions of dollars in lost tax revenue a year. Although individual tax lawyers were deeply involved in abusive tax shelters, the organized tax bar supported law reforms intended to rein in the tax shelter market. The bar\u27s initiatives included due diligence obligations for opinion letters issued in connection with tax shelters and other proposals intended to strengthen practice standards. The tax bar\u27s positions in the tax shelter debate cannot be adequately explained by conventional accounts of the organized bar, which assume that bar groups act to further lawyers\u27 or clients\u27 economic interests or to improve the reputation of the bar. Nor, however, should the bar\u27s positions be taken as pure expressions of public-mindedness. A more nuanced conception of professionalism is required to account for the bar\u27s initiatives. This Article argues that the bar\u27s positions reflect a specific professional ideology of tax practice in which tax lawyers, by virtue of their expertise, serve as gatekeepers for the tax system. While not conferring immediate economic benefits to tax lawyers, the bar\u27s reforms further tax lawyers\u27 long-term reputational and other interests, even as they serve to bind lawyers to higher practice standards and protect the integrity of the tax system

Techno-Optimism & Access to the Legal System

For legal technologists, apps raise the prospect of putting the law in the hands of disadvantaged people who feel powerless to deal with their legal problems. These aspirations are heartening, but they rest on unrealistic assumptions about how people living in poverty deal with legal problems. People who are poor very rarely resort to the law to solve their problems. In the situations when they do seek solutions, they confront educational and material impediments to finding, understanding, and using online legal tools effectively. Literacy is a significant barrier. More than 15 percent of all adults living in the United States are functionally illiterate, meaning that, at best, they read at the fourth-grade level. Inadequate access to the Internet and limited research skills compound the challenges. To reach people from marginalized groups, access-to-justice technologies need to be integrated with human assistance

WHERE THE AMAZON RIVER MEETS THE ORINOCO RIVER. ARCHAEOLOGY OF THE GUIANAS

Archaeological and interdisciplinary investigations conducted in the Guianas during these last 35 years offer a new picture of the pre-Co­lumbian Guianas. Although archaeology still is relatively incipient in the Guianas, it is possible to draw up a panorama of the prehistory of this huge region. During the last millennium before the European Conquest, Guianas coast was divided into two main territories dominated by two different cultural entities. Cayenne Island in French Guiana was the key-area marking the boundary between two cultural traditions. Western coast up to the Guyana was dominated by cultures linked to the Arauquinoid Tradition originated in the Middle Orinoco. Eastern coast was occupied by cultures belonging to the Polychrome Tradition of the Lower Ama­zon. These two cultural entities grew up from ca. AD 600 up to their destruction by the European Conquest. Keywords: Archaeology, Guianas, arauquinoid tradition, polychrome traditionLas investigaciones arqueológicas e interdisciplinarias llevadas a cabo en las Guyanas durante estos 35 últimos años muestran una nueva imagen de las Guyanas precolombinas. Si bien la arqueología es relativamente joven en las Guyanas, es posible presentar un panorama de la prehisto­ria de esta inmensa región. En el último milenio antes de la Conquista europea, el litoral de las Guyanas estaba dividido en dos territorios prin­cipales dominados por dos diferentes conjuntos culturales. La Isla de Cayena en Guyana francesa era una zona clave que marcaba la frontera entre dos tradiciones culturales : la costa occidental dominada por cul­turas ligadas a la Tradición Arauquinoide originaria del Medio Orinoco y el litoral oriental ocupado por culturas pertenecientes a la Tradición Policroma del Bajo Amazonas. Estas dos entidades culturales se desar­rollaron cerca de 600 DC hasta su destrucción por la Conquista europea. Palabras-clave: Arqueología, Guyanas, tradición arauquinoide, tradición policromaLes recherches archéologiques et interdisciplinaires menées dans les Guyanes durant ces 35 dernières années fournissent une nouvelle image des Guyanes précolombiennes. Bien que l’archéologie soit relativement jeune dans les Guyanes, il est possible de dresser un panorama de la préhistoire de cette immense région. Durant le dernier millénaire avant la Conquête européenne, le littoral des Guyanes était divisé en deux territoires principaux dominés par deux différents ensembles culturels. L’Île de Cayenne en Guyane française était une zone charnière mar­quant la frontière entre deux traditions culturelles. La côte occidentale était dominée par des cultures liées à la Tradition Arauquinoïde issue du Moyen Orénoque. Le littoral oriental était occupé par des cultures appartenant à la Tradition Polychrome du Bas Amazone. Ces deux en­tités culturelles se développèrent de 600 apr. J.-C. environ jusqu’à leur destruction par la Conquête européenne. Mots clés: Archélogie, Guyanes, tradition arauquinoïde, tradition polychrome. Archaeological and interdisciplinary investigations conducted in the Guianas during these last 35 years offer a new picture of the pre-Co­lumbian Guianas. Although archaeology still is relatively incipient in the Guianas, it is possible to draw up a panorama of the prehistory of this huge region. During the last millennium before the European Conquest, Guianas coast was divided into two main territories dominated by two different cultural entities. Cayenne Island in French Guiana was the key-area marking the boundary between two cultural traditions. Western coast up to the Guyana was dominated by cultures linked to the Arauquinoid Tradition originated in the Middle Orinoco. Eastern coast was occupied by cultures belonging to the Polychrome Tradition of the Lower Ama­zon. These two cultural entities grew up from ca. AD 600 up to their destruction by the European Conquest. Keywords: Archaeology, Guianas, arauquinoid tradition, polychrome traditio