Do I need a Whistleblower attorney?

Under certain circumstances, the IRS and SEC/CFTC whistleblower programs allow whistleblowers to proceed without an attorney. However, beacuse there are important considerations when deciding how to proceed, it is advisable to contact an experienced whistleblower attorney.

Tax Shelters

A tax shelter is an investment that allows you to reduce your tax liability. Examples include investments in pension plans and real estate. When tax shelters are designed solely for the purpose of avoiding taxes, they may be deemed abusive by the IRS. Taxpayers who use abusive tax shelters may face civil and criminal penalties.

Types of Abusive Tax Shelters

The IRS has published a list of abusive tax shelters to place taxpayers on notice that benefits claimed as a result of these transactions will not be honored. If you have information about a tax shelter transaction that has been identified by the IRS as abusive, you should consider submitting a tax whistleblower claim. You should also consult with an experienced tax whistleblower attorney if you believe that you have knowledge of an abusive tax shelter that has not been identified by the IRS.

Transactions identified by the IRS as abusive tax shelters include:

  • Lease-In/Lease-Out (LILO) Transactions
  • Sale-In/Lease-Out (SILO) Transactions
  • 302 Basis-Shifting Transactions
  • Inflated Basis “CARDS” Transactions
  • Stock Compensation Transactions
  • Loss Importation Transaction
  • Debt Straddles
  • Partnership Straddle Tax Shelter
  • Tax Shelter – Distressed Asset/Debt
  • Tax Shelter – Redemption Bogus Optional Basis
  • Fast Pay or Step-Down Preferred Transactions
  • Transactions Involving the Distributions of Encumbered Property in Which Losses Claimed for Capital Outlays have been Recovered (BOSS Transactions)
  • Inflated Partnership Basis Transactions (Son of BOSS Transactions)
  • Intermediary Transactions
  • Off-Shore Deferred Compensation Arrangements
  • Accounting for Lease Strips and other Stripping Transactions
  • Offsetting Foreign Currency Option Contracts
  • Abusive Foreign Tax Credit Transactions
  • S-Corporation Tax Shelter Fraud Involving Shifting Income to Tax Exempt Organization
  • Abuses Associated with S-Corp ESOPs
  • Guam Trust

Gross Valuation Overstatement

Any statement made regarding the value of property or services is considered a gross valuation overstatement if the stated value exceeds 200% of the amount determined to be the correct value, and the value of property or services is used to claim a deduction or tax credit.

Anyone who organizes, assists in the organization of, or participates in the sale of any interest in a tax shelter may face a penalty if that person makes a qualifying false or fraudulent statement or a gross valuation overstatement in connection with this activity. The penalty is equal to the lesser of $1,000 or 100% of the gross income derived from the activity.

The American Jobs Creation Act (2004) imposes a penalty of 50% of the gross income obtained from tax shelter activity if the individual knows or has reason to know the statement regarding the tax benefits of this shelter is false or fraudulent. However, this enhanced penalty does not apply to a gross valuation overstatement.

Success in Representing Abusive Tax Shelter Whistleblowers

The attorneys at Kenney & McCafferty have assisted accountants, money managers, and individuals working in finance departments with knowledge of abusive tax shelters maximize their tax reward for their information. We have worked on abusive tax shelter cases involving BOSS and Son of BOSS schemes resulting in recoveries of tens of millions of dollars for the IRS and substantial rewards for our clients.

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