2022 Tax Scams Identified by IRS

If it seems too good to be true, it probably is. This adage rings especially true for tax scams. Recently, the IRS began its Dirty Dozen list for 2022, which includes potentially abusive arrangements that taxpayers should avoid. The tax scams in this series focus on four transactions that are wrongfully promoted and will likely attract additional agency compliance efforts in the future. Those four abusive transactions involve charitable remainder annuity trusts, Maltese individual retirement arrangements, foreign captive insurance, and monetized installment sales. These are the first four entries in this year’s Dirty Dozen series.

 

Taxpayers who have already claimed the purported tax benefits of one of these four transactions should consider taking corrective steps, including filing an amended return and seeking advice from a qualified tax professional. Where appropriate, the IRS will challenge the purported tax benefits from the transactions on this list and may assert accuracy-related penalties. Further, to combat the evolving variety of these potentially abusive transactions, the IRS created the Office of Promoter Investigations (OPI), which will take advantage of a variety of ways to find potentially abusive transactions, including examinations, promoter investigations, whistleblower claims, data analytics, and reviewing marketing materials.

We all need to watch out for – and avoid –  schemes, many of which are now promoted online, that promise tax savings that are too good to be true and put us in a legally compromising position.