US Dirty Dozen
By Darlene Hart, USTAXFS
For about 20 years now, the IRS has been annually publishing a ‘Dirty Dozen’ list of common taxpayer “scams.” The intent is to warn taxpayers, tax professionals, financial institutions, and financial advisors of abusive transactions, including bogus tax avoidance strategies as well as consumer- focused scams that target average taxpayers.
The IRS identifies problem areas through audits, promoter investigations, whistleblower claims, data analytics, taxpayer complaints, and by reviewing marketing material.
This year, as to abusive transactions, the IRS is examining Charitable Remainder Annuity Trusts, Maltese Pension Plans, foreign captive insurance policies and monetized installment sales; it is also looking into accounts holding cryptocurrency or other digital assets. Certain scams target High Net Worth Individuals with solicitations for digital assets transactions, syndicated conservation easements, and micro captive insurance transactions.
As to consumer scams, the IRS warns taxpayers about Covid related fraud involving stolen economic impact payments, fraudulent claims for unemployment compensation, fake charities, and phishing emails, social media posts and text messages using the IRS logo with subject lines like “Action Required”. Many of these scams target the elderly. There are also the Offer in Compromise scams, where companies make outrageous claims about how they can settle a person’s tax debt for pennies on the dollar.
This year, USD 80 billion has also been allocated to increase IRS funding under the Inflation Reduction Act of 2022, and USD 46 billion is targeted at enforcement while the remaining amount will go toward upgrading the IRS’s antiquated technology.
Darlene F. HartGGI member firm
London, UK, Zurich, Switzerland
T: +44 20 7357 8220
Darlene Hart is the Founder of USTAXFS, formerly US Tax & Financial Services, (est. 1986). With clients in over 30 countries, the firm provides US tax advice and planning, and compliance services for individuals, partnerships, corporations, trusts, and estates around the world. Darlene continues to help private clients get compliant with their US tax obligations and also advises banks, financial institutions, and trust companies. Darlene works mainly from the office in Zurich.
Published: Trust & Estate Planning Newsletter, No. 10, Autumn 2022 l Photo: ClaraNila - stock.adobe.com