Tax Evasion and Misuse of Trusts in List of 'Dirty Dozen' Tax Scams

Tax Evasion and Misuse of Trusts in List of 'Dirty Dozen' Tax Scams

The Internal Revenue Service released a list of the “Dirty Dozen” tax scams it would be focusing on in this year, and urges consumers and corporations alike to make note of these crimes.

Offshore tax evasion was high on the list of infractions that the IRS is watching out for, and the agency has made significant strides in their ability to detect and prosecute these crimes. The agency has already collected $5.5 billion since 2009 from American owners of foreign accounts who have participated in voluntary disclosure programs, and has also signed a number of agreements with other countries that require them to disclose account information for Americans with foreign accounts.

Although the latest round of spending cuts is expected to lower the number of audits the IRS takes on each year, it is likely that the agency will continue to devote significant resources toward fighting offshore tax evasion.

Many business owners and high net-worth individuals also rely upon trust to lower their tax liability and transfer wealth to future generations. However, given the large amount of money that is typically deposited in a trust, the IRS also listed misuse of these tax strategies as another area of focus. While a trust can be instrumental in estate planning and transfers of wealth, it’s important for individuals to consult a legal or tax professional when setting them up to lower their risk of making costly mistakes or errors.