[Congressional Record Volume 148, Number 104 (Friday, July 26, 2002)]
[Senate]
[Pages S7425-S7426]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




            CBO ESTIMATE OF THE TAX SHELTER TRANSPARENCY ACT

  Mr. BAUCUS. Mr. President, the Committee on Finance filed a 
legislative report on S. 2498, the Tax Shelter Transparency Act of June 
28, 2002. At the time the report was filed, the Congressional Budget 
Office cost estimate was not available. The cost estimate has been 
finalized by the CBO and is attached for public review.
  I ask unanimous consent that the enclosed cost estimate for S. 2498 
be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:


                                  Congressional Budget Office,

                                                    U.S. Congress,
                                    Washington, DC, July 15, 2002.
     Hon. Max Baucus,
     Chairman, Committee on Finance, U.S. Senate, Washington, DC.
       Dear Mr. Chairman: The Congressional Budget Office has 
     prepared the enclosed cost estimate for S. 2498, the Tax 
     Shelter Transparency Act.
       If you wish further details on this estimate, we will be 
     pleased to provide them. The CBO staff contacts are Erin 
     Whitaker and Annie Bartsch, who may be reached at 226-2720.
           Sincerely,
                                                 Barry B. Anderson
                                             (For Dan L. Crippen.)

           CONGRESSIONAL BUDGET OFFICE COST ESTIMATE--S. 2498


                                summary

       S. 2498 would create new penalties and expand existing 
     penalties that may be applied to taxpayers who fail to 
     disclose certain types of information on their tax returns. 
     In particular, the bill would allow the Department of the 
     Treasury to impose penalties, on taxpayers who failed to 
     report certain information for reportable transactions, 
     modify the penalties for inaccurate returns if the 
     inaccuracies had a significant tax avoidance purpose, and 
     modify the definition of ``substantial understatement'' of 
     tax for corporate taxpayers for purposes of imposing a 
     penalty. It also would repeal the current rules regarding 
     registration of tax shelters and instead require persons who 
     assist with transactions in such shelters (``material 
     advisors'') to report certain information to the Secretary of 
     the Treasury. The bill would impose a penalty on those 
     material advisors who fail to file the information completely 
     and accurately.
       The Congressional Budge Office (CBO) and the Joint 
     Committee on Taxation (JCT) estimate that enacting the bill 
     would increase governmental receipts by $17 million in 2002, 
     by $601 million over the 2002-2007 period, and by about $1.5 
     billion over the 2002-2012 period. Since S. 2498 would affect 
     receipts, pay-as-you-go procedures would apply.
       JCT has determined that the bill contains no 
     intergovernmental mandates as defined in the Unfunded 
     Mandates Reform Act (UMRA) and would not affect the budgets 
     of state, local, or tribal governments. JCT has determined 
     that the provision of the bill relating to reportable 
     transactions and tax shelters contain private-sector 
     mandates, and that the cost of complying with these mandates 
     would exceed the threshold established by UNRA ($115 million 
     in 2002 adjusted annually for inflation) in 2005 and 2006.


                 ESTIMATED COST TO THE FEDERAL GOVERNMENT

       The estimated budgetary impact of the bill is shown in the 
     following table.

----------------------------------------------------------------------------------------------------------------
                                                                   By Fiscal Year, in Millions of Dollars
                                                           -----------------------------------------------------
                                                              2002     2003     2004     2005     2006     2007
----------------------------------------------------------------------------------------------------------------
                                               Changes in Revenues
 
Estimated Revenues........................................       17       59      102      134      140      147
----------------------------------------------------------------------------------------------------------------

                            BASIS OF ESTIMATE

       All estimates were provided by JCT. The provisions relating 
     to reportable transactions and tax shelters would compose a 
     significant portion of the effect on revenues if enacted. 
     These provisions would increase revenues by $17 million in 
     2002, $547 million over the 2002-2007 period, and about $1.3 
     billion over the 2002-2012 period.


                       PAY-AS-YOU-GO CONSIDERATIONS

       The Balanced Budget and Emergency Deficit Control Act sets 
     up pay-as-you-go procedures for legislation affecting direct 
     spending or receipts. The net changes in governmental 
     receipts that are subject to pay-as-you-go procedures are 
     shown in the following table. For the purposes of enforcing 
     pay-as-you-go procedures, only the effects through 2006 are 
     counted.

[[Page S7426]]



--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                          By Fiscal Year, in Millions of Dollars
                                                                 ---------------------------------------------------------------------------------------
                                                                   2002    2003    2004    2005    2006    2007    2008    2009    2010    2011    2012
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in receipts.............................................      17      59     102     134     140     147     155     163     174     187     203
Changes in outlays..............................................                                      Not applicable
--------------------------------------------------------------------------------------------------------------------------------------------------------

             Impact on State, Local, and Tribal Governments

       JCT has determined that the bill contains no 
     intergovernmetnal mandates as defined in UMRA and would not 
     affect the budgets of state, local, or tribal governments.


                      IMPACT ON THE PRIVATE SECTOR

       JCT has determined that sections 101, 102, 104, 201-203, 
     and 215 of the bill contain private-sector mandates. JCT has 
     determined that the cost of complying with these mandates 
     would exceed the threshold established by UMRA ($115 million 
     in 2002, adjusted annually for inflation) in 2005 and 2006.


                         ESTIMATE PREPARED BY:

       Erin Whitaker and Annie Bartsch (226-2720).


                         ESTIMATE APPROVED BY:

       G. Thomas Woodward, Assistant Director for Tax Analysis.

                          ____________________