Rember that junk about - Posted by Bill Gatten
Posted by Bill Gatten on June 26, 2001 at 21:02:10:
Pure Trusts a couple months ago?
Something interesting that Jim Pasquini in our office rn across today…from the IRS:
Fraudulent Foreign and Domestic Trusts
Promoters of abusive trusts can lead innocent taxpayers to financial ruin.
The bottom line: “Don’t Buy In!”
What Is An Abusive Trust?
Establishing a foreign or domestic trust for the purpose of hiding income and assets from taxation is illegal. Abusive Trust Schemes typically involve the creation of one or more trusts into which the taxpayer transfers his or her personal and/or business assets and to which the taxpayer assigns his or her income. The taxpayer, the promoter, or someone who will allow the taxpayer in reality to control the activities of the trust is then assigned as the trustee.
The Facts About Trusts
A trust is a form of ownership which completely separates responsibility and control of assets from all the benefits of ownership
Trusts are used in such matters as estate planning; to facilitate the genuine charitable transfer of assets; and to hold assets for minors and those unable to handle their financial affairs
All trusts must comply with the tax laws as set forth by the Congress in the Internal Revenue Code, Sections 641-683
Violations of the Internal Revenue Code may result in civil penalties and/or criminal prosecution
Civil sanctions can include a fraud penalty up to 75% of the underpayment of tax attributable to the fraud in addition to the taxes owed
Criminal convictions may result in fines up to $250,000 and/or up to five years in prison for each offense
Taxpayers are responsible for payment of their taxes as set forth by Congress regardless of who prepares their return
IRS Issues Warning
Income cannot be shifted to another entity for tax purposes and must be reported by the individual who earned it. In addition, personal living expenses which were not deductible prior to the creation of a trust are not deductible by virtue of assignment of assets and income to a trust. No matter how carefully the trust documents are drafted, if the intent of the trust is to avoid taxes, the trust will be treated as a sham.
In April 1997, the Internal Revenue Service issued Notice 97-24 and Information Release 97-19 warning taxpayers to avoid abusive trust schemes that promise bogus tax benefits, and to take steps to correct past participation in such trusts.
I agree with bill Brocnhik who said: “People who promote the so-called Pure Trust or take it seriously are tooth fairies (or something like that).”