The Internal Revenue Service could be doing more to detect and deter promoters of abusive tax schemes, according to a new report.
The report, released Tuesday by the Government Accountability Office, pointed to the various schemes listed by the IRS every year in its roundup of the Dirty Dozen tax scams. The report often attracts plenty of media coverage, but the report found said the list does not include instructions on how the public can report potential abusive tax schemes to the IRS. The GAO recommended the IRS amend the Dirty Dozen publication to include this information.
The report acknowledged the IRS has taken steps to identify and stop promoters who arrange and market abusive tax schemes. In fiscal years 2021 and 2022, the IRS conducted hundreds of investigations that led to tens of millions of dollars in penalties.
Currently, the IRS is aware of more than 40 types of abusive tax schemes involving promoters. The omnibus spending bill passed by Congress in late December aims to stop one type of promoter of an arrangement that’s often listed by the IRS among the Dirty Dozen — syndicated conservation easements — in which promoters are able to sell tax breaks on unused land to groups of investors appraised at many times its purchase value on condition that it won’t be developed. According to ProPublica, the spending bill will limit taxpayers’ deduction to two and a half times their investment.
One method the IRS uses to identify these promoters is information…
