Earlier in July, the Internal Revenue Service compiled its much-awaited ‘Dirty Dozen’ annual list of scams. The IRS has also issued a complementary warning to all taxpayers to avoid being misled by fraudulent tax-saving strategies! In the event of IRS tax problems, the correct approach would be to search for an experienced tax debt lawyer, however, some taxpayers explore avenues that lead them towards scams and more trouble with the IRS. Continue reading as we unveil 6 out of 12 ‘Dirty Dozen Scams’.
1. Abusive Syndicated Conservation Easements
Promoters of syndicated conservation easements distort a tax law provision allowing for conservation easements by employing inflated valuations of undeveloped land and partnership agreements with no valid economic purpose. These abusive arrangements serve no purpose other than to scam the tax system by providing massively inflated tax deductions and generating large fees for the promoters, which is why it is crucial to consult a professional tax lawyer for IRS tax problems solutions.
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2. Abusive Micro-Captive Insurance Arrangements
Accountants, wealth planners, and promoters induce owners of closely held organizations to enroll in plans that lack many of the characteristics of insurance in abusive “micro-captive” structures. The IRS is being extra cautious towards such fraudulent insurance agreements, which also highlights the need to hire a tax problems lawyer for IRS tax problems.
3. Maltese (or other foreign) Pension Arrangements Misusing Treaty
In these transactions, taxpayers try to avoid taxes by contributing to specific foreign individual retirement systems in Malta (or other foreign countries). In these transactions, the taxpayer often lacks a direct connection, and local law either enables non-cash donations or doesn’t reduce the number of contributions based on income generated through job or self-employment activities.
4. Concealing Assets in Offshore Accounts and Improper Reporting of Digital Assets
Concealing assets in offshore accounts through virtual currency or other digital assets is one of the major challenges the IRS faces. With these new patterns and trends emerging in complicated international tax dodges and cross-border transactions, the IRS is monitoring financial activities with more vigilance and leaving no stone unturned in enforcing the law with integrity and utmost professionalism.
Related Blog Post: How to Spot and Avoid Tax Scams
5. Use of Charitable Remainder Annuity Trust (CRAT) to Eliminate Taxable Gain
Such transactions transfer valuable property to a CRAT. Taxpayers incorrectly assert that transferring appreciated assets to the CRAT provides a step-up in basis to fair market value as if the assets were sold to the trust. The CRAT then sells the estate, but doesn’t recognize profit because of the alleged step-up in basis.
6. High-income individuals not filing tax returns
The IRS continues to target anyone who chooses to break the law by failing to submit a tax return, particularly those generating more than $100,000 per year. Those who choose not to file a return despite having a legal filing requirement, particularly those generating more than $100,000 a year, pose a compliance issue that the IRS continues to prioritize.
Conclusion
As a taxpayer, you need to understand that taking shortcuts is never the best way to resolve IRS tax problems. The IRS provides several tax problem solutions based on your eligibility, such as allowing you concessions (time and monetary) under the Fresh Start Initiative. However, everything depends on your eligibility. This is where the Law Offices of Nick Nemeth can help you by providing 360-degree IRS solutions in all IRS locations in Dallas. Call (972) 426-2553 to consult our professional tax lawyers, or fill out our free case evaluation and consultation form. Speak to a seasoned tax problems lawyer today!
