"Safe" tax planning for the affluent

Interesting article in Wednesday's New York Times by Lynnley Browning, How to Know When a Tax Deal Isn't a Good Deal, Sept. 10, 2008.  The IRS is continuing its crackdown on various scams and shelters used by the wealthy to hide their assets or create artificial losses to eliminate their tax liabilities --like hiding assets in offshore bank accounts and failing to declare income from those accounts on tax returns.

So this article provides a few helpful hints for those who don't want to face penalties, interest, and perhaps even a perp walk.  Although it claims to be giving something more specific than "if it sounds too good to be true, it probably is", the tips seem to me just common sense.  But they are worth repeating, just in case those with new millions can't resist the temptation to take a few aggressive positions on their returns. So, folks, listen up.

• Be suspicious if your accountant provides an idea that makes this tax return markedly different (lower taxes) than prior returns.
• Run the other way when your adviser wants you to keep quiet about this special deal and doesn't want any other tax expert to be consulted.
• Avoid the small firm's customized and tailored complex tax transaction, especially if it involves derivatives that you've never heard of and wouldn't have considered except for your tax adviser's claim that it would help you avoid big tax liabilities.
• Interesting claim: people who inherit oodles of money inherit the money managers to keep them out of criminal tax territory, while people who earn oodles may not have the structure in place to keep them walking the line.  (Is this just saying that those with inherited wealth have such sophisticated advice that they will in fact take aggressive tax positions,but they are not as likely to get caught commiting criminal tax fraud?)
• Beware of new, undiscussed, untried strategies without a track record.
• Really beware of new strategies that claim to save you oodles in tax money but are just dressed to look like an investment without making you commit your cold hard cash.
• When the "investment" is all offshore, it may be out of bounds for tax purposes as well.