February 24, 2024

On 10/5/23, the IRS issued a warning and offered tips to all taxpayers, including high-net-worth taxpayers, to be on the lookout for promotions that promise art donation deductions that are actually a tax scheme. The IRS has noticed an increase in unscrupulous promoters using direct solicitation to persuade taxpayers, especially high-income individuals, to purchase art and then take an incorrect deduction for the donated art. This type of scam can result in active promoter investigations, taxpayer tax return audits, and civil penalty investigations.

To combat this issue, the IRS has included art donation schemes on their annual “Dirty Dozen” list of abusive tax arrangements. This list, released on 3/31/23, focuses on high-income filers and aims to increase compliance efforts to ensure that taxpayers are paying the correct amount of tax owed. IRS Commissioner Danny Werfel has stated that the agency is dedicated to cracking down on abusive tax arrangements and warns taxpayers to be wary of potentially fraudulent schemes and promoters.

In addition to targeting art donation schemes, the IRS is also keeping a close eye on other types of fraudulent activities. For example, they have issued a caution to shoppers about potential internet scams involving Starbucks and the Stanley Cup. They have also warned against a new tax scam in the Palmer-Mat-Su Valley Frontiers area and have placed Mumbai builder Vijay Machinder in ED custody after a remand related to a housing fraud investigation. Furthermore, the agency has cautioned against online gaming fraud and has detained construction executive Vijay Machinder in a ₹45 crore housing fraud investigation.

It is important for all taxpayers to be vigilant and to report any suspicious activity to the IRS. The agency offers tips on how to protect oneself from fraud, including avoiding promoters who promise unrealistic deductions for donations of art or other items. Taxpayers should also seek out trusted, reputable tax professionals for guidance and should properly research any charitable organizations before making donations.

In conclusion, the IRS is actively working to combat fraudulent activities, particularly those targeting high-income and high-wealth individuals. Taxpayers should be aware of potential scams and take necessary precautions to protect themselves and their finances. By staying informed and reporting any suspicious activity, we can all work together to prevent these types of fraud schemes.

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