How to avoid buying an abusive tax shelter
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When investments are marketed under such cloaks of confidentiality, it is sometimes an effort to discourage you from checking with your own tax experts, says Luscombe. A seller who is simply concerned about safeguarding a proprietary investment plan should not have a problem with your advisers looking it over as long as they also agree to restrictions on discussing it with others.

"Always get a second opinion, whether it's medical or financial," says Provine. "Think of it as a souped-up car that has lots of bells and whistles, lots of options. You really have to understand that, while the vehicle might be pitched as going fast, it could be an accident waiting to happen."

To forestall a financial crash, take the time you need to ensure that any investment vehicle meets your safety standards.

Know exactly what you're buying
You also need to employ what Scharin calls the common-sense tests: Can you understand the nature of the deal? Does it seem sound? How am I going to benefit from this? Is it designed only for the tax savings or is my money going to be used to make money?

Provine says ideally you'll want to have a good enough understanding of how the shelter works so that you can explain it to someone else.

Certainly, tax laws are complex and there are some legitimate tax-shelter transactions that are so convoluted that most of us don't understand them. But the more complex the arrangement is, Scharin says, the more chance for the IRS to challenge it as lacking a business purpose.

"What has to happen is: The expert [proposing the shelter] has to be very conversant in what's going to happen to inform the client of the [investment's] upside and downside," says Provine.

The price of abusive shelters
When the IRS does decide that a shelter is abusive, it's going to cost you. Not only did KPMG pay a hefty price for marketing the disallowed plans, so did investors who bought them.

"Basically you would be looking at a reversal of the tax strategy that you used in your return," says Luscombe. "You'll face some additional income tax and because of the time that usually passes between the filing and the disallowance, you're probably looking at interest charges associated with it, as well as penalties -- failure to pay and possibly some abusive penalties -- associated with it."

Some of KPMG's customers will get help in paying what they now owe to the IRS. In addition to the criminal fines, the accounting firm also agreed to pay $195 million to settle the civil claims of almost 300 investors.

However, even after these investors have put the KPMG shelters behind them, their tax worries might not be over.

"The key issue for a taxpayer," says Provine, "is once the IRS opens a tax return and makes some judgment regarding some specific issue on that return, your entire return is open for audit, so you could have other areas open to examination.

"They don't divulge their auditing methods, but if you have large transactions with large deductions and large offsets, they clearly want to go in and find out why."