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In late 1999, an unmarked manila envelope arrived at the U.S. Department
of the Treasury.1 The appearance of a mysterious envelope at the
Treasury was not uncommon at that time. Every once in a while, Treasury
officials would receive a parcel containing the prospectus for a complicated
tax evasion strategy. They assumed that the documents came from
tax professionals who had been shown the materials by a client or had
come across them at work. These professionals, worried that the Internal
Revenue Service might never discover the tax ploy, wanted to alert
the agency so that it could close down the strategy and prevent the loss
of millions of dollars in tax revenue. Torn between their concern that
the tax shelter would allow wealthy individuals improperly to avoid millions
of dollars in taxes and their obligation to protect client or employer
confidences, some professionals chose to try to protect the federal fisc.
Anonymity was the fig leaf that allowed them to make peace with the fact
that by sending the materials to the government they were betraying their
clients’ or employers’ confidences.
The manila envelope that happened to arrive at the Treasury that fall
contained marketing materials describing a shelter known under the acronym
BOSS, which was being promoted by Big Five accounting firm
PricewaterhouseCoopers. From the look of the documents, BOSS was being
offered to high-wealth individuals who wanted to avoid paying any
taxes on large capital gains.2 If, as it turned out, the promotional documents
described an abusive shelter—one whose claimed tax benefits were
not recognized by the law—Treasury officials would be able to use the
detailed description as a roadmap to shut down the shelter and find the
taxpayers who were claiming tax benefits from the strategy. Government
officials immediately began analyzing the documents and sharing them
with other government agencies.
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