A St. Louis attorney is currently convincing rich businesswomen to convert their income streams into an arrangement wherein an ESOP (an "employee" owned stock plan) owns an S corp.
S corps don't pay taxes, but rather pass income directly to owners, who then pay taxes. But ESOP's don't pay taxes (they distribute money directly to employees).
Thus, this new arrangement legally dodges all federal income taxes.
A rather high-level IRS executive admitted to me personally that they've already lost two court cases trying to stop this "scam", and that until Congress changes the law that this thing is going to snowball as more people learn about it.
It certainly puts the old scams of off-shore credit-cards to shame. Who needs to hide a little income and risk jail when they can legally dodge all federal income taxes, after all?! Interesting, but a quick Google got me to Beware of S Corporation ESOP Management Company Scams I'd be inclined to investigate the case law first.... :-)
Nice article. Did you read its conclusion?