You cannot cheat the IRS! I've said it before and I'll keep on saying it. It may seem like you have really pulled the wool over their eyes when you try stuff like using an abusive tax shelter. But, the IRS will eventually figure it out. And, when they do…they'll be mad.So, what is an abusive tax shelter? It's when you invest money some place in an effort to reduce income tax, and serves no other economic purpose. Donating large amounts of money to an established charity is serving an economic purpose; therefore you can deduct the amount of income you sent to them from your taxes. Hiding a noteworthy sum of income in a foreign account so that you don't have to pay taxes on it...is using an abusive tax shelter. See the difference?
General Electric, one of the biggest American companies in our nation's history, is just now learning that lesson. Their Castle Harbour unit has been claiming to be partners with two foreign banks, but was using an abusive tax shelter in reality. From 1993 to 1998 alone, they sent more than $300 million of income their way. This greatly lowered the amount of taxes GE paid. In fact, in 2010 a $3 billion tax credit ensured the company got a refund.
But, the good times are over. Once the IRS figured out that the company was operating a long-running, complicated abusive tax shelter scam, they went after GE hard. They took them to court over and over again, until they were able to stick a guilty sentence on the company.
If you think the IRS won't come after you for using an abusive tax shelter, you couldn't be more wrong. They will hound you until you have no defense left. Then, you'll have a much higher tax debt than if you had just paid your taxes to begin with. On top of all that, the IRS will expect for you to pay their legal fees. Take it from me, the IRS Hitman, send honest tax returns to the IRS. If you can't pay the bill, there are better alternatives. Call 888-415-1337 or fill out the submission form to get a free consultation on what would work best for your tax problem.