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Government auditors say that the IRS knows of over forty types of promoter-marketed abusive tax schemes. These schemes range from highly complex, multilayer transactions to basic tax dodges. Included in this list are the usual suspects:
The IRS hears of new tax schemes through referrals from its auditors and the public and from tips from other agencies. The agency has done hundreds of probes into promoters of these schemes in 2021 and 2022, which has led to about $120 million in assessed penalties.
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Expect those assessed penalty numbers to increase as the IRS’s Office of Promoter Investigations, created in 2021, steps up its game. One can surmise that the IRS will use a portion of its $80 billion in extra funding over the next ten years to root out more promoter shenanigans.
This first appeared in The Kiplinger Tax Letter. It helps you navigate the complex world of tax by keeping you up-to-date on new and pending changes in tax laws, providing tips to lower your business and personal taxes, and forecasting what the White House and Congress might do with taxes. Get a free issue of The Kiplinger Tax Letter or subscribe.