Professor Joseph Bankman is quoted in an SF Weekly article about a multimillion-dollar illegal tax shelter deal between the San Francisco Municipal Railway and outside investors:
"These deals stank when they were happening," said Joseph Bankman, Ralph M. Parsons professor of law and business at Stanford Law School. "They were in a class of deals that stank, and the IRS has gone through them all."
Bankman says it's unlikely that officials at Muni or BART, or other public dealmakers, will suffer significant consequences for their actions. The IRS is aggressively going after tax evaders, but not necessarily all of their abettors. And San Francisco's deal doesn't appear to include language putting the city on the hook for guaranteeing the tax shelter would always be approved by the IRS.
After Bankman analyzed a portion of the Muni deal I faxed him, he said it's likely the agency will get to hang on to its $33 million payoff, because the deal never included a San Francisco guarantee that the tax shelter would pass muster. "Actually, in a sick way, maybe it's not so bad" for complicit city officials, he said.