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Investments that yield tax benefits are sometimes called tax shelters and can be legal under federal and state laws. But abusive tax shelters are schemes involving transactions with little or no substance that are not recognized by federal and state taxing authorities and that may create taxpayer liability for interest, penalties, and possible criminal prosecution.

In Georgia, as in other states, there are legitimate tax shelters that offer tax benefits to investors, such as retirement accounts, real estate investments, and municipal bonds. These are legal and recognized by both federal and state tax authorities. However, abusive tax shelters are illegal. They typically involve complex transactions designed to produce tax benefits that are not intended by the law. These schemes lack economic substance and are not recognized by tax authorities. Engaging in abusive tax shelters can lead to severe consequences, including the imposition of interest and penalties by the Internal Revenue Service (IRS) and the Georgia Department of Revenue. Additionally, individuals involved in such schemes may face criminal prosecution. It is important for taxpayers to ensure that any tax shelter they consider is legitimate and complies with both federal and state tax laws.

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Taxes

tax shelter

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Taxes

tax shelter

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