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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 New Hampshire, as in other states, certain investments that offer tax benefits, commonly known as tax shelters, are legal and recognized under both federal and state tax laws. These can include investments in retirement accounts, real estate, municipal bonds, and other vehicles that provide tax deductions, credits, or deferrals. However, abusive tax shelters are a different matter. These are typically complex financial arrangements designed primarily to reduce taxes through artificial transactions that lack genuine economic substance. The Internal Revenue Service (IRS) and New Hampshire's Department of Revenue Administration do not recognize abusive tax shelters and engaging in such schemes can lead to severe consequences. Taxpayers involved in abusive tax shelters may face substantial penalties, interest on unpaid taxes, and the possibility of criminal charges. It is important for investors in New Hampshire to distinguish between legitimate tax-saving strategies and those that could be considered abusive or illegal.

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Taxes

tax shelter

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tax shelter

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