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Tax Fraud
Illegitimate Trusts
Promoters of abusive tax transactions are increasingly urging taxpayers to transfer
assets into trusts. The promoters promise a variety of benefits: a reduction of income
subject to tax, deductions for personal expenses paid by the trust and a decrease in
gift or estate taxes. But abusive trust arrangements, will not produce the advertised
tax benefits. The IRS is actively examining suspect trusts and has obtained more than
a dozen injunctions against promoters of illegal programs. Many of those con artists,
along with their clients, have been criminally prosecuted.
Don't simply take any tax trust sales pitch at face value. Before entering any trust
arrangements, seek the advice of a trusted tax professional. Trusts are a legitimate
and frequently used financial planning tool, where a taxpayer's money is controlled
and managed by an independent trustee. In many cases, they do offer tax advantages.
How to Report Suspected Tax Fraud Activity
Suspected tax fraud can be reported to the IRS using IRS Form 3949-A, Information Referral.
Form 3949-A is available for download from the IRS Web site at IRS.gov, or through the U.S.
Mail by calling 1-800-829-3676. The completed form or a letter detailing the alleged fraudulent
activity should be addressed to the Internal Revenue Service, Fresno, CA 93888. The mailing
should include specific information about who is being reported, the activity being reported,
how the activity became known, when the alleged violation took place, the amount of money
involved and any other information that might be helpful in an investigation. The person
filing the report is not required to self-identify, although it is helpful to do so. The
identity of the person filing the report can be kept confidential. The person may also be
entitled to a reward.
Related Tax Fraud Links:
IRS Free Online Filing
The "Dirty Dozen" Tax Scams
Tax Scams - How to Recognize and Avoid Them
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