Misuse of Trusts, Retirement Fraud Among IRS 'Dirty Dozen' Scams

The improper use of private annuity and foreign trusts and individual retirement account abuses are among the top scams in the Internal Revenue Service’s “Dirty Dozen” list.

The IRS said for years, promoters have urged taxpayers to transfer assets into trusts. While there are many legitimate, valid uses of trusts in tax and estate planning, some promoted transactions promise reduction of income subject to tax, deductions for personal expenses and reduced estate or gift taxes. Such trusts rarely deliver the promised tax benefits and are being used primarily as a means to avoid income tax liability and hide assets from creditors, including the IRS, the agency said.