The IRS is warning against a tax scam involving frivolous art donation tax deductions, where promoters promise “too good to be true” art values. Unlike some other tax scams that the IRS warns taxpayers about, this art scam specifically targets high-income taxpayers.
The warning comes as the IRS ramps up enforcement on high-income earners including millionaires and “tax cheats.” IRS audits of questionable donations are already underway through which the agency has reportedly recovered more than $5 million in additional tax owed.
In a statement regarding the art scam, IRS commissioner Danny Werfel offers a reminder for taxpayers: “Beauty is not always in the eye of the beholder when it comes to tax deductions of art.”
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So, how can the wealthy avoid falling victim to this art deduction tax scam? According to Werfel, taxpayers should “understand the rules” and “watch out for red flags like inflated values or questionable appraisals.”
Art donation tax scam
In this particular scam, promoters offer art purchases at prices that appear discounted. Promoters may ask scam victims to keep the art…
