Only a few years ago, the Internal Revenue Service was portrayed as a borderline psychopath. Today, there's a new villain: a growing number of corporate and individual tax cheats. So now the IRS, which has pushed customer service and held down audits to burnish its public persona, is being encouraged to go get 'em. Expressing a spreading disgust, Sen. Max Baucus, chairman of the Senate Finance Committee, says that the ability of high rollers and corporate America to use tax shelters and other complex financial schemes "makes average taxpayers feel like chumps." Many maneuvers knead the tax code to fashion income-lowering deductions and other benefits the law didn't intend. Says attorney Blake Rubin of Arnold & Porter, in Washington, D.C., "A lot of these deals are flaky and based on shaky legal opinions."

Auditing is low--0.6 percent of personal returns get that treatment--and the tempo isn't likely to rise much. But the IRS hopes to be more effective by aiming at specific abuses. One target: an estimated 1 million to 2 million Americans who hide income in Caribbean or other banks and use credit or debit cards to tap the funds for everything from groceries to cars. To get around bank secrecy in these havens, the IRS has gotten court orders for MasterCard, Visa, and American Express to directly provide records of transactions. "The guarantee of secrecy . . . is evaporating," IRS Commissioner Charles Rossotti warned recently.

Disclosure. The IRS wants more explanation from shelter promoters about the deals they cook up for individuals and companies. "If a taxpayer feels comfortable entering into a transaction, if a promoter feels comfortable selling a transaction, and an adviser feels comfortable recommending a transaction, they all should feel comfortable detailing the transaction," argues Mark Weinberger, outgoing assistant treasury secretary. Administrative rulings and proposed legislation are designed to force more disclosure of arrangements that are difficult to unravel when looking at a tax return. Yale law Prof. Michael Graetz defines the quarry: "A deal done by very smart people that, absent tax considerations, would be very stupid."

One scheme that recently got a thumbs-down from the IRS involved using loans to artificially inflate the cost of an asset to create a tax-deductible loss. But even letter-of-the-law deals irritate. Sen. Charles Grassley, ranking Republican on the Finance Committee, is no fan of a tough-cop IRS. But he wants legislation to curtail U.S. firms that set up phantom headquarters in Bermuda or other low-tax countries. "It's simply outrageous that these companies abandon the United States in a time of war, deficits, and recession," he says. Accountants say the pace of moves abroad is escalating.

Doubts about the Bush administration's willingness to crack down on business interests remain. Still, "there has definitely been a shift in rhetoric," says David Burnham of Trac, a Syracuse University affiliate that analyzes IRS actions. That alone might scare off some would-be finaglers.