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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 Ohio, as in other states, certain investments that offer tax benefits, commonly known as tax shelters, are legal and can be used to reduce one's tax liability. These may include investments in retirement accounts, real estate, and other vehicles that are recognized by the Internal Revenue Service (IRS) and Ohio Department of Taxation as legitimate means of saving on taxes. However, abusive tax shelters are a different matter. These are typically complex financial arrangements that lack a genuine economic purpose other than to evade taxes. The IRS and state authorities do not recognize abusive tax shelters, and engaging in such schemes can lead to severe consequences, including interest charges, penalties, and the possibility of criminal prosecution. Taxpayers in Ohio are advised to be cautious and to consult with an attorney or a certified tax advisor before engaging in any transactions that could be considered tax shelters to ensure they comply 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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