The IRS Dirty Dozen, Part III

By Jerry Stewart

Today I’m wrapping up my talk on so-called tax avoidance schemes, which are really tax evasion scams. And believe you me, you don't want to have anything to do with tax evasion. Here are a few more of the tax scams the IRS has labeled their "Dirty Dozen".

One that is used a lot is what the IRS calls "Return preparer fraud". In short, it works like this - the return preparer prepares the tax return in such a way that the taxpayer gets a huge refund. And for this special return prepared, the preparer charges a ridiculously high fee. After all, look how much he’s getting you back. But if the IRS catches this scam, they may go after the tax preparer, but the correct amount owed to the IRS, plus penalties and interest, all belongs to you.

There are also a lot of scams used, which involve this idea of setting up tax-exempt organizations. The taxpayer is told he can contribute certain assets to what he doesn't know is a bogus organization and the taxpayer would still keep control of his assets. The taxpayer gets the big tax write-off and keeps the assets to boot. It sounds too good to be true - and it is.

I've also had a lot of clients call me with outlandish plans to work with some offshore bank or company that promises if these funds are sent offshore, than there will be no tax to pay. But know this - the IRS is working very hard to catch all people involved with these offshore scams and when they finally make the catch, you don't want to be part of it.

Now let me end today's report and this series on income tax evasions with this thought. None of us like paying taxes and when we see any of our tax monies wasted by the government on frivolous pork barrel projects it makes us hate paying taxes even more. But don't let this great dislike for paying taxes somehow push you into any illegal tax scams. When you do this, not only do you empower these tax scammers to keep going. You also put your- self and all of your assets in great jeopardy. The tax scammer gets rich, the IRS continues on with their work, and you take the hit.

So what's my advice for you to avoid these scams? Make sure you work with only reputable professionals who won't take you down these roads to ruin.

Well that's all for now. Be careful with your investments. Next week I'll answer this question – "Is wealth always a good thing?" Until then don't forget Its your money!