Real estate professionals never let a good crisis go to waste — but neither do scammers. As the double-dip recession takes a turn heading into 2023, tax scams are bound to crop up throughout California’s most vulnerable housing markets.
The architects of tax avoidance schemes will continue to sell panic-stricken consumers the same lies which resurface in every recession. The snake oil peddlers of today may entice their victims with new packaging, but the ingredients are toxic to your clients’ hard-won equity all the same.
As the first line of defense for homebuyers and sellers, real estate professionals need to familiarize themselves with the latest fraudulent and abusive tax schemes. Brush up on the top 10 taxpayer scams in 2022, courtesy of the Internal Revenue Service (IRS).
1. Unlawful trusts
An abusive or unlawful trust promises to reduce or eliminate taxable income or hide assets from the IRS in exchange for control of a beneficiary’s trust. These are empty promises with devastating results, as the trust might gain title to the victim’s property, leaving them with nothing. The IRS reserves the right to administer civil penalties or criminal prosecution against those who take part in abusive tax-avoiding trust arrangements.
2. Charitable Remainder Annuity Trust (CRAT)
These types of charitable remainder trusts seek to eliminate a seller’s taxable gain profits resulting from the sale of an asset subject to taxation, such as real estate. These…
