United Parcel Service used a Bermuda-based insurance company it controlled to divert taxable profits away from the United States. Colgate-Palmolive Co. tried--but failed--to obtain tens of millions of dollars in refunds through a complex offshore partnership.

As Congress considers how to pay for new programs or finance tax cuts in other areas, the notion of cracking down on questionable tax shelters to increase revenue represents a tempting, low-hanging plum for Congress.

Democrats last year proposed using such revenue to finance tax concessions to small businesses as part of a new minimum-wage bill. That idea may be revived this year.

"There's no question the issue has legs," said a lobbyist for a major financial institution. "Republicans don't want to be labeled tax shelter apologists either."

The issue has also come up in the presidential race. Democratic candidate Bill Bradley earlier this month took aim at the accounting industry for "peddling" corporate tax shelters that cost the Treasury about $10 billion a year--even though he has received more than $115,000 from more than 150 employees of the Big 5 accounting firms.

To crack down on abuses, Bradley proposed increasing penalties on the accounting companies and law firms that design and promote questionable tax shelter schemes and banning the lucrative contingency fees that some accounting firms collect when they unearth tax savings for their corporate clients.

Vice President Gore, who has received his largest single bundle of contributions from an accounting company--$121,000 from 165 employees of Ernst & Young as of October--chided Bradley for "discover[ing] the issue only after becoming a candidate for president."

And indeed, the issue faded quickly on the campaign trail. Still, it remains in the sights of the administration and Congress.

Although the 1986 tax reform law closed dozens of long-standing loopholes for businesses and individuals, the subsequent proliferation of corporate tax shelters "presents an unacceptable and growing level of tax avoidance behavior," according to a Treasury Department white paper issued in July.

"We recognize there is an issue," said Tom Ochsenschlager, a member of a task force set up by the American Institute of Certified Public Accountants to examine the questions of abusive shelters. "Some shelters are beyond the pale, and we feel some steps should be taken."

The Treasury Department, the Internal Revenue Service and tax courts recently shut down several prominent schemes. Most involved large multinational corporations, which are best able to use offshore havens, and transactions among several companies.

At the center of tax shelter growth, investigators say, are major accounting and law firms, brokerage houses and investment banks that have built a lucrative business devising the schemes and selling them to corporations (sometimes for a cut of the savings).

"Tax shelters are the most profitable line for the big accounting companies," said former IRS commissioner Don Alexander.

An article in the American Lawyer in November named a number of large law firms that charge hefty fees for writing legal opinions justifying the legality of certain shelters. Such opinions usually protect corporations against penalties by showing that they had "substantial cause" to believe a shelter was legal. The opinions are then mass-marketed to other clients for six-figure fees.

To deal with the situation, the administration last year proposed doubling the penalties for abusive shelters and imposing stiff excise taxes on contingent fees paid to promoters of the schemes.

Rep. Lloyd Doggett (D-Tex.), who has spearheaded the drive in Congress for reform, has proposed even more far-reaching legislation that the Congressional Budget Office estimates would save at least $1 billion a year.

"The literal 'hustling' of improper tax shelters is so commonplace that one representative of a major Texas-based, multinational corporation recently indicated that he gets a cold call every day from someone hawking such shelters," Doggett said.

But legislative efforts to rein in questionable tax shelters face strong political opposition from the lobbyists for the accounting firms and brokerage houses.

Opponents of Doggett's and other reform proposals warn that defining a tax shelter is extremely difficult. And if business is deterred from its usual tax avoidance activities, consumers ultimately will pay through higher prices, they say.

Kenneth Kies, a senior lobbyist for PricewaterhouseCoopers, has questioned the need for any new legislation.

"The IRS's recent victories in the tax court in a number of shelter cases serve as a strong deterrent to improper behavior and call into question the need for additional legislation," he wrote in a November letter to The Washington Post.

The accounting firms have plenty of muscle with which to back their views. Kies and a number of other key Washington lobbyists for the industry have close ties to leading Republicans on the tax-writing House Ways and Means Committee.

They are also well-financed. Ernst & Young, PricewaterhouseCoopers, KPMG Peat Marwick, Arthur Andersen, and Deloitte and Touche contributed $3.9 million to political candidates in the 1998 election cycle through political action committees, and gave another $1.15 million to political parties.

The American Institute of Certified Public Accountants reported spending $1 million on lobbying in the first half of 1999.