FROM THE OFFICE OF PUBLIC AFFAIRS

The Treasury Department and the Internal Revenue Service issued proposed regulations effective Tuesday aimed at shutting down an abusive tax-avoidance scheme involving charitable remainder trusts. Under this scheme, individuals attempt to use charitable remainder trusts to convert highly-appreciated assets, such as stock, into cash for personal use, without ever paying tax on the gain.

"Shutting down schemes like this helps us create and build on a culture of compliance," Treasury Secretary Lawrence H. Summers said. "When we eliminate abusive tax schemes and shelters, our aim is not merely to protect revenues, but also to protect those who willingly pay their fair share."

The proposed regulations, issued under specific regulatory authority granted by Congress in 1996 to prevent abuses of the tax rules regarding trusts, ensure that individuals are taxed appropriately when they receive a distribution from a charitable remainder trust.