I spend most of my day advising business owners on how to find more tax deductions for their business so that they can keep more of their hard earned money. I am also very aware of IRS rules, regulations and choices that will result in IRS scrutiny. We stay away from those! There are so many legitimate tax deductions you can use in your business, why play the game of roulette and risk an audit with tax deductions that the IRS specifically targets for scrutiny? This seems foolish to me.
This week, the IRS published its 2022 Dirty Dozen list. This is a list of potentially abusive arrangements that taxpayers should avoid. The potentially abusive arrangements 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.
“Taxpayers should stop and think twice before including these questionable arrangements on their tax returns,” said IRS Commissioner Chuck Rettig. “Taxpayers are legally responsible for what’s on their return, not a promoter making promises and charging high fees. Taxpayers can help stop these arrangements by relying on reputable tax professionals they know they can trust.”
The four potentially abusive transactions on the list are the first four entries in this year’s Dirty Dozen series. In coming days, the IRS will focus on eight additional scams, with some focused on the average taxpayer and others focused on more complex arrangements that promoters market to higher-income individuals.
The IRS reminds taxpayers to watch out for and avoid advertised schemes, many of which are now promoted online, that promise tax savings that are too good to be true and will likely cause taxpayers to legally compromise themselves.
So remember, when your friends, colleagues and neighbors brag about their tremendous tax schemes and savings, ask your tax advisor before you proceed and if it sounds too good to be true, it probabhly is!
You can reach me anytime at http://www.wendybarlin.com where you will also find Resources and Worksheets you can put to use immediately.