Closing the Escape Routes

The single most powerful closure is one no US administration has ever fielded, though the United Kingdom (DOTAS) and the European Union (DAC6) both run versions of it: an Advisor Disclosure and Promoter Liability regime. Promoters, counsel, and advisors must report any scheme bearing statutory avoidance hallmarks within 30 days of first marketing it. Each scheme receives a registration number that filers must carry on their returns, so a structure is identified before a single dollar moves through it.

The penalty for non-reporting falls on the advisor, not only the taxpayer — the people who design and sell avoidance bear the duty to disclose it. Listed transactions receive strict-liability economic-substance treatment: a deal whose only purpose is tax reduction does not work, and saying so is not a factual dispute. The Accord does not wait to discover avoidance; it turns every scheme into a pre-discovered one.

Below the headline regime, the surface is closed pathway by pathway. Each is an old route — and the block that ends it.

1. 1
   Gift–death equivalence

   A gratuitous transfer is a realization event to the giver and an accession event on the recipient's lifetime ledger — a gift and a bequest are taxed identically. Without this, giving before death simply compresses the whole settlement chain.
2. 2
   Valuation consistency

   One value per asset per year: the prepayment filing value is the estate value is the heir's accession basis. An understatement today is self-documented liability tomorrow.
3. 3
   Payroll base on active flow-through income

   Distributive shares of owners who materially participate are compensation, not passive return. The Gingrich–Edwards salary/distribution split is closed.
4. 4
   Personal-services look-through

   Income from personal services billed through an entity is attributed to the individual who performed them. Modernized accumulated-earnings rules reach closely-held passive retention.
5. 5
   Fringe imputation

   Personal use of entity assets — aircraft, housing, vessels — is imputed at fair market value into the payroll base. VAT input credits are denied on the personal-use share.
6. 6
   Retirement-account integrity

   Arms-length fair value is required at contribution, ending the under-priced-founder-share gambit. A tax-favored balance cap (~$10M) applies, with mandatory distribution above it.
7. 7
   No family-entity valuation discounts

   Minority and marketability discounts are disallowed on transfers within family-controlled entities (the §2704 pattern). The asset is worth what it is worth, not what a contrived fraction implies.
8. 8
   Powers-based trust classification

   A trust's tier is set by its powers, not its label: any power to decant, amend, postpone distribution, or add beneficiaries makes it dynasty-class (the two-thirds excise). The $5M excise deduction aggregates across trusts sharing a grantor or beneficiary family.
9. 9
   Donor-advised-fund payout condition

   The one-third charitable rate requires a 5% minimum annual payout and genuine independent sponsoring-organization control. A warehouse with a charitable nameplate does not qualify.
10. 10
    Offshore accumulation and exit

    A throwback interest charge hits foreign-trust accumulation distributions (§665); transfers from covered expatriates to US persons are taxed to the recipient at the top rate (the §2801 analog); exit-tax valuations are trued up against realized prices within three to five years; and 30% withholding falls on payments to non-compliant foreign institutions (the FATCA pattern).
11. 11
    No statute of limitations on concealment

    No limitation period begins to run on an undisclosed asset until it is disclosed. Until then the back-tax compounds at the federal rate plus 8 points, with the 25% penalty and heir liability intact.

The Accord does not claim it can unilaterally monitor the world's tax havens — no government can. What it builds instead is a lattice from which concealment cannot escape over a lifetime: automatic information exchange (FATCA / CRS / CARF), recurring leak-driven discovery (empirically about once every three years), whistleblower awards at 15–30% of recovery, the advisor-disclosure regime above, and heir liability with no statute of limitations — concealment must survive the holder's death plus two heir generations, indefinitely.

The arithmetic makes the choice for the holder. At roughly a 3%-per-year discovery hazard, cumulative discovery over 30 years is about 60%, and the expected cost of concealment is a large multiple of the Year-1 0.8% voluntary-disclosure rate. Coming forward is not a concession — it is the dominant strategy.