The long-running economic boom has been very good to U.S. corporations. Since 1988, corporate income before taxes has risen by 127.8 percent, climbing from $292.5 billion to $666.4 billion last year, according to the congressional Joint Committee on Taxation.

The boom also has been good to federal tax collectors--but not quite as good. Corporate income tax collections over the same period rose only 99.7 percent, to $188.7 billion last year from $94.5 billion in 1988.

The difference, Treasury Department officials and many private experts agree, is largely the work of a thriving new industry: corporate tax shelters.

Using all the nooks and crannies of the extremely complex corporate income tax code, and relying on the fact that the understaffed Internal Revenue Service will often be unable to ferret out what is going on, entrepreneurial investment bankers, accountants and others are marketing deals, often prepackaged, to help companies cut their taxes.

"The literal hustling of improper tax shelters is so commonplace that one representative of a major Texas-based multinational corporation recently indicated he gets a cold call every day from someone hawking such shelters," Rep. Lloyd Doggett (D-Tex.), who has an anti-shelter measure pending, told the House Ways and Means Committee recently.

No one is sure how much revenue the government is losing as a result of corporate tax shelters, but estimates range into billions of dollars a year.

And the broad data are suggestive. Corporate tax receipts for fiscal 1999 actually declined by 2 percent--or $4 billion. The last time corporate tax receipts declined was in fiscal 1990, when the economy was heading into recession, the taxation committee noted.

Promoters make use of such devices as foreign tax credits, interest deductions, depreciation and insurance benefits to devise deals that accomplish little other than to generate deductions and credits.

Doggett, quoting Yale law professor Michael J. Graetz, defined a tax shelter as "a deal done by very smart people that, absent tax considerations, would be very stupid."

Some accountants and businesses argue that legislation is not needed, and if enacted might damage legitimate business dealings. Those fears are being heard on Capitol Hill.

Ways and Means Committee Chairman Bill Archer (R-Tex.), though he did hold a hearing earlier this month on the problem, said, "A primary focus of this committee . . . will be to ensure that any new laws do not end up interfering with legitimate business transactions." He also criticized the Treasury for not making full use of the powers it already has.

With an election year coming up, several members as well as their aides said they see little prospect of action.

"Inattention to the rampant spread of abusive corporate tax shelters represents one of the major failures of this Congress," Doggett said.

Acting Assistant Treasury Secretary Jonathan Talisman noted last week that the Clinton administration has already shut down a number of shelter schemes through administrative action and that it will make anti-shelter legislation a priority in the coming year.

He said that unlike shelters for individual taxpayers, which were shut down several years ago, no single approach will suffice because corporate shelters evolve so quickly.

"It's like a hydra," he said. "You cut off its head in one place and it just grows another someplace else." Thus, a multi-pronged approach of administrative, legislative and enforcement actions is required, he said.

Abusive shelters often lack economic substance and do not stand up in court if the IRS detects them.

In the past two years, the courts have backed the IRS in attacks on three major shelters, including some used by Winn-Dixie Stores Inc. and Compaq Computer Corp.

The Joint Committee on Taxation's staff director, Lindy Paull, noted that those three cases alone involved tax revenue of more than $7 billion over a number of years, and many other companies have tried strategies similar to those the court knocked down.

She said her committee understands that there are as many as 100 other cases similar to Winn-Dixie's, which involved the company's purchase of life insurance on its employees in a deal that allowed Winn-Dixie to borrow against the insurance and realize more in tax savings than the cost of the plan.

Experts say several factors account for the rapid growth of corporate tax shelters:

Corporate management's search for new ways of maximizing profits and cash flow. Having squeezed production and other business costs, and unable to raise prices much, companies have begun looking at their taxes as a cost to be cut.

Increasing complexity in both the tax code and the world of finance make it easier to obscure economic reality--or lack of it--in a series of transactions.

The perception among investment banks and others that dreaming up and packaging tax products "could be a successful business line," as William J. Wilkins, of Wilmer, Cutler & Pickering and a member of the American Bar Association tax section, put it. (The tax section, which does not speak for the full ABA, is made up of lawyers who specialize in taxes.)

Low risk. Not only is it difficult for the IRS to detect a shelter, but penalties are modest and not always imposed. If a shelter is discovered and disallowed, the company will likely owe only the taxes it would have owed anyway, plus interest. "So it's a pretty good financial deal," said John E. Chapoton, a former assistant Treasury secretary and member of the ABA's tax section, which has been pushing for increased disclosure by firms to discourage shelters.

The Treasury Department, the ABA and others say shelters cause harm far beyond the initial loss of revenue. When one firm uses a shelter successfully, its competitors will feel pressure to try it, too, or be left at a disadvantage.

In addition, individual taxpayers, who have to pay more as others succeed in paying less, become contemptuous of the tax system and more inclined to try tax avoidance maneuvers of their own.

"If unabated, this will have long-term consequences to our voluntary tax system far more important than the revenue losses we currently are experiencing in the corporate tax base," Talisman told the Ways and Means panel.

The Clinton administration is proposing increased disclosure requirements and tougher penalties. It would like to see penalties extended beyond the taxpayer to promoters, advisers, facilitators and others involved in making a shelter work. It also would like to see written into law the doctrine of economic substance--a court-developed principle that a transaction must have economic reality beyond its tax consequences to be allowable.

The ABA tax section has proposed that companies be required to disclose any transaction that results in more than $10 million of tax savings, and require a "responsible" corporate officer to sign off on it. Lawyers in the tax section think that would make companies less inclined to buy prepackaged shelters.