BLIPS is an

acronym An acronym is a word or name formed from the initial components of a longer name or phrase. Acronyms are usually formed from the initial letters of words, as in ''NATO'' (''North Atlantic Treaty Organization''), but sometimes use syllables, as ...

for ''Bond Linked Issue Premium Structure'', or ''Bond Linked Investment Premium Strategy''. It is a type of tax shelter involving investors who take out bank loans that the government considers illegitimate. These loans are then shifted to partnerships to claim tax losses. BLIPS are invalid in the eyes of the

Internal Revenue Service The Internal Revenue Service (IRS) is the revenue service for the United States federal government, which is responsible for collecting U.S. federal taxes and administering the Internal Revenue Code, the main body of the federal statutory ta ...

(IRS).

History

BLIPS represent one of four abusive tax shelters that the

Senate Permanent Subcommittee on Investigations The Permanent Subcommittee on Investigations (PSI), stood up in March 1941 as the "Truman Committee," is the oldest subcommittee of the United States Senate Committee on Homeland Security and Governmental Affairs (formerly the Committee on Governme ...

investigated in 2003. The Subcommittee found that

KPMG KPMG International Limited (or simply KPMG) is a multinational professional services network, and one of the Big Four accounting organizations. Headquartered in Amstelveen, Netherlands, although incorporated in London, England, KPMG is a net ...

had sold to at least 350 people from 1997 to 2001, earning fees of $124 million. Those shelters cost the Treasury at least $1.4 billion in unpaid taxes, according to the subcommittee. In the investigation, KPMG argued that investors knew they were taking a risk that the IRS might not accept the claims.''Becnel v. KPMG LLP'', 387 F. Supp. 2d 984, 2005-2 U.S. Tax Cas. (CCH) paragr. 50,573 (W.D. Ark. 2005) (Federal court had subject matter jurisdiction, based on "substantial federal question," in connection with controversy removed from Arkansas state court to Federal district court).

References

{{reflist Taxation in the United States