IRS Targets Abusive Tax Scheme Promoters: Kiplinger Tax Letter

Tax schemes range from basic tax dodges to highly complex transactions.

picture of the IRS Internal Revenue Service sign for tax schemes story
(Image credit: Getty Images)

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Government auditors say that the IRS knows of over forty types of promoter-marketed abusive tax schemes. These schemes range from highly complex, multilayer transactions to basic tax dodges. Included in this list are the usual suspects:

The IRS hears of new tax schemes through referrals from its auditors and the public and from tips from other agencies. The agency has done hundreds of probes into promoters of these schemes in 2021 and 2022, which has led to about $120 million in assessed penalties. 

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Expect those assessed penalty numbers to increase as the IRS’s Office of Promoter Investigations, created in 2021, steps up its game. One can surmise that the IRS will use a portion of its $80 billion in extra funding over the next ten years to root out more promoter shenanigans.

This first appeared in The Kiplinger Tax Letter. It helps you navigate the complex world of tax by keeping you up-to-date on new and pending changes in tax laws, providing tips to lower your business and personal taxes, and forecasting what the White House and Congress might do with taxes. Get a free issue of The Kiplinger Tax Letter or subscribe.

Joy Taylor
Editor, The Kiplinger Tax Letter

Joy is an experienced CPA and tax attorney with an L.L.M. in Taxation from New York University School of Law. After many years working for big law and accounting firms, Joy saw the light and now puts her education, legal experience and in-depth knowledge of federal tax law to use writing for Kiplinger. She writes and edits The Kiplinger Tax Letter and contributes federal tax and retirement stories to and Kiplinger’s Retirement Report. Her articles have been picked up by the Washington Post and other media outlets. Joy has also appeared as a tax expert in newspapers, on television and on radio discussing federal tax developments.