The IRS is warning everyone to beware of promoters who offer false hopes of large tax deductions from abusive tax schemes. The schemes are generally marketed by unscrupulous promoters who provide false claims about their legitimacy and charge their clients high fees.. These promoters often create new ways to cheat the system and market their schemes aggressively. Unfortunately, some people play the audit lottery hoping they don’t get noticed.
Promoters make statements relating to a tax benefit or a gross valuation overstatement that they know or should know are false or fraudulent. They often promise to eliminate or substantially reduce your tax liability.
The IRS relies on you to help us identify promoters of “too good to be true” tax schemes and tax professionals who use improper methods to avoid paying taxes. Reporting promoters of abusive tax schemes will help prevent innocent people from falling from these schemes and prevent our country from being cheated by these con artists.
The tax schemes are often complex and involve improper flow-through entities such as trusts and limited liability companies. They disguise the true ownership of income or assets. Other schemes are less complex, involving the sale of low value photograph prints or inappropriate claims for refund or credit. Abusive syndicated conservation easements are another common scheme.
Abusive tax schemes also include improper claims of business credits and improper monetized installment sales.
For detailed information on the tax schemes listed above as well as other schemes not listed here, visit the IRS Dirty Dozen page.
Anyone who falls for abusive tax schemes remains responsible for their tax return.
If you know of one of these schemes or an abusive tax return preparer, you can complete an online referral using the Form 14242, Document Upload Tool or you can send a completed Form 14242, Report Suspected Abusive Tax Promotions or Preparers, and any supporting materials to the IRS Lead Development Center (LDC).
Mail: Internal Revenue Service Lead Development Center Stop MS5040 24000 Avila Road Laguna Niguel, CA 92677-3405 Fax: 877-477-9135
Depending on the type of tax scheme and your role, you may be entitled to an award from the IRS Office of the Whistleblower for your information.
David Zubler is a nationally known tax accountant and Enrolled Agent who resides in East Tennessee. He is the author of six tax books and a syndicated columnist who has shared tax advice on podcasts and national TV and has been referred to as America’s Tax Guru. He is the founder and president of Your Tax Care. He represents clients nationwide before the IRS and provides tax strategies, and tax education, including David’s one-minute tax tip radio recordings at YourTaxCare.com. David can be reached at (865)363-3019 or by email at david@yourtaxcare.com.
