Wednesday, February 21, 2007

The IRS "Dirty Dozen" for 2007

The Internal Revenue Service has announced its least favorite over-aggressive (i.e. fraudulent) tax positions during the early stages of the 2006 tax season. Gaining a special place of dishonor are attempts to claim excessive amounts of telephone tax credits. Additional "creative" [?] strategies include: shifting undervalued property to Roth IRAs, shell corporations used to underreport income (with ignoring of controlled group law probably occurring as well), American Indian Employment credit (technically available to qualifying employers, it has been used by some employees a la the notorious "slavery credit" of several years ago), structured entity credits (basically considered an abusive tax shelter, the entity exists solely to claim state conservation and/or federal rehabilitation credits). Among the "oldies but baddies" were zero wage W-2s, trust abuse, fraudulent charitable deductions, return preparer fraud and phishing. Included in the not dirty dozen but still dishonorable mention category were: suspect credit counselors, employment tax evasion and "no gain" deduction.

I understand the lack of enthusiasm for paying taxes--certainly I would like more accountability by the Federal Government for its spending growth over the last 80 years or so. At the same time, defrauding the government is neither moral nor shrewd.


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