IRS 2023 Dirty Dozen – Scam #10 (Part C)

IRS 2023 Dirty Dozen – Scam #10:   The Internal Revenue Service cautioned taxpayers to resist questionable tax practitioners and independent promoters selling schemes aimed at wealthy taxpayers. (Part C)

As part of the IRS annual Dirty Dozen, these potentially abusive arrangements involve things like Charitable Remainder Annuity Trusts and monetized installment sales.

Where appropriate, the IRS may assert accuracy-related penalties ranging from 20% to 40% of an underpayment of tax, or a civil fraud penalty of 75% of any underpayment of tax related to transactions like those listed here. However, this is not an exclusive list of transactions the IRS is scrutinizing, and taxpayers and practitioners should always be wary of participating in transactions that seem “too good to be true.”

Schemes aimed at high-income filers – Report Tax Fraud

As part of the Dirty Dozen awareness effort, the IRS encourages people to report individuals who promote improper and abusive tax schemes as well as tax return preparers who deliberately prepare improper returns.

To report an abusive tax scheme or a tax return preparer, people should mail or fax a completed Form 14242, Report Suspected Abusive Tax Promotions or PreparersPDF and any supporting materials to the IRS Lead Development Center in the Office of Promoter Investigations.

Mail:

Internal Revenue Service Lead Development Center
Stop MS5040
24000 Avila Road
Laguna Niguel, California 92677-3405
Fax: 877-477-9135

Alternatively, taxpayers and tax practitioners may send the information to the IRS Whistleblower Office for possible monetary reward.

For more information, see Abusive Tax Schemes and Abusive Tax Return Preparers.

Next week  #11:  Bogus tax avoidance strategies (Part A)

(IRS Web Site)  (TTT 11/07/23)