Tax-savings plans of varying quality—and legality—are marketed heavily to doctors, business owners, and other high-income earners on a predictable cycle: every spring before Tax Day and every fall before the close of the calendar year. These taxpayers make attractive targets because they often face significant tax exposure, manage complex finances, and have limited time to evaluate sophisticated strategies presented under year-end pressure.

As important as tax avoidance planning is to every business owner and physician's wealth preservation plan, it's vital that the plan you chose is legally compliant to avoid legal jeopardy and expenses for tax evasion that are often a multiple of what simply paying the taxes would have been in the first place. In some cases, the taxpayer is simply conned into buying they shouldn't by the “promoter” of the plan. In other cases, it may be a case of affinity fraud where you are sold a plan based on a personal relationship or because the promoter has sold the same planning to those you know. Either way, just as with Ponzi schemes, people often buy bad planning for two core reasons, because they are promised numbers that are too good to be true and because they are being told what they want to hear, even if they should know better. The IRS is aggressively pursuing actions against both the promoters of these schemes and the taxpayers who participate in them.

Know the rules that apply to every U.S. taxpayer

1.    U.S. citizens are taxed on a worldwide basis and must pay taxes on income and report accounts held or earned anywhere in the world.

2.    Assets held in an offshore trust, LLC, corporation, foundation, or similar device are not an exception to your obligations as U.S. taxpayer. You are usually still the beneficial owner or beneficiary of the legal entity, absent a formally executed and reported completed gift, and income earned by the entity is attributable to you for tax purposes.

3.    This is still true whether you take a distribution, transfer those funds to an American account, hold them offshore, or simply spend them outside the United States.

4.    No matter whose advice you rely on or how much you paid for the advice or planning, you are always personally responsible for the accuracy of the information on your tax return and the legality of any tax strategy you employ.

5.    Penalties for engaging in abusive planning and tax evasion may be civil or criminal and in addition to the disallowance of the deduction or other benefit can result in fines, penalties, and interest in addition to the original amount due and legal defense fees that may be required.

6.    Remember the “Rule of Three”, strategies that allow all three of the following are often abusive tax shelters, you have to pay somewhere:

-              Contributions are tax deductible as opposed to being made with “after tax” money

-              Growth is tax free

-              Distributions are tax free

7.    Any planner that requires you sign a non-disclosure agreement about their strategy, and they work they will do for you should be a red flag. There is very little that is “proprietary” about U.S. tax law and if the strategy is legitimate the plan promoter should be able to point to specific tax code that supports it, and that can easily be verified by your own CPA or tax lawyer.

8.    Scam promoters don't want your CPA, lawyers, etc. to see and question their work, so they will often preemptively frame it as a strategy that is, “Too sophisticated for your local CPA or lawyer to know about and use”.

9.    In some cases, tax shelter promoters will use the names of notable people as proof of the validity of the strategy. Essentially the pitch is, “Person X (who is rich, famous, powerful, etc.) uses this plan and they are very smart. Therefore, it must be legal”. In most cases, the famous people named are not using the strategies at all, in a few others, they've simply been taken as well.

10. Any tax avoidance strategy involving the phrases Complex Trust, Pure Trust, Maritime Trust, Constitutional Trust, or Sovereign Trust, (among others) should be treated with extreme caution. These are hallmarks of common scams that frivolous arguments and claim to create tax free income and provide asset protection benefits; they fail on both counts.

11. Many trust scams use actual legitimate terms of art but use them in ways that that are abusive, fraudulent and just plain stupid. For instance, the idea that a “complex, irrevocable, grantor, etc. etc. trust” can somehow magically avoid all future income and capital gains tax is overtly fraudulent, yet we routinely see high income individuals pay anywhere from $25,000 to $100,000 for this planning, often sold by promoters with no professional liability, like a an actual CPA or tax lawyer would have.

12. Successful people often take obviously bad advice because they want it to be true. On multiple occasions I have been part of chain of advisors asked to comment on a bad plan and even when a CPA, a tax lawyer and myself have all agreed that a particular plan being pitched was abusive and would lead to harm, the client did it anyway, because the numbers were just too good to pass up.

Recognize the sales tactics behind abusive planning

Tax schemes are often sold through trust rather than analysis. A promoter may rely on a referral from a colleague, physician, vendor, investor, or member of a professional or social group. That familiarity can create the false impression that the strategy has already been vetted. It has not. Affinity, credentials, testimonials, and polished materials are not substitutes for independent legal and tax review.

Be especially cautious when the pitch includes any of the following:

·       Guaranteed or unusually large tax savings with little discussion of risk

·       Pressure to act before year-end or before a limited “window” closes

·       Claims that the strategy is secret, proprietary, or known only to insiders

·       Instructions not to discuss the plan with your existing CPA or attorney

·       Assurances that “everyone is doing it” or that an audit is unlikely

·       Fees tied primarily to the size of the deduction, loss, or tax benefit

·       Documents that do not match the economic reality of the transaction

·       A promoter who cannot clearly explain the governing authority, reporting obligations, material risks, and relevant enforcement history

Use a disciplined due-diligence process

Before committing funds, signing documents, or claiming a tax benefit, ask:

1.    Who is giving the advice? Confirm licenses, experience, disciplinary history, insurance coverage, and who will stand behind the work.

2.    Who is being paid? Identify every fee, commission, referral payment, and financial conflict.

3.    What authority supports the position? Ask for a written explanation that your independent advisors can evaluate.

4.    What facts must remain true? Understand the business purpose, valuation assumptions, cash flows, ownership terms, operational requirements, and recordkeeping obligations.

5.    What must be reported? Determine the tax-return disclosures and any separate federal, state, foreign-account, entity, or information-reporting requirements.

6.    What happens if the benefit is denied? Model the original tax, interest, penalties, defense costs, liquidity demands, and possible unwind of the transaction.

The bottom line

Doctors and business owners should use every lawful opportunity to reduce taxes and preserve wealth. They should also assume that an aggressive strategy will eventually need to be explained by documents, economics, and credible legal authority—not by a sales presentation. If a plan cannot survive review by an independent CPA or tax attorney who is not being paid to sell it, do not rely on it.

 

The I.R.S. 2026 Dirty Dozen: 12 key scams to watch for

This guidance comes directly from the I.R.S. itself, and are the top scams identified in their annual Dirty Dozen list.

1. IRS impersonation by email and text (phishing + smishing). Scammers send emails, direct messages (DMs), and texts that appear to be from the IRS, often using alarming language and QR codes that direct taxpayers to fake IRS websites to “verify” accounts, enter personal information, or claim refunds. The IRS urges taxpayers not to click links or open attachments from unexpected messages and to report suspicious IRS-related emails, DMs, and texts. The IRS reported over 600 social media impersonators during fiscal year 2025.

As a reminder, never click any unsolicited communication claiming to be from the IRS, as it may install malware surreptitiously. These links may install malicious software, including ransomware, on a taxpayer's personal device, potentially preventing access to their files or personal information.

2. AI-enabled IRS impersonation by phone (robocalls, voice mimicry, spoofed caller ID). Phone scams continue to evolve, including calls that use computer-generated tactics and spoofed caller ID to appear legitimate. The IRS reminds taxpayers that it generally contacts taxpayers by mail first and does not leave urgent, threatening prerecorded messages, call to demand immediate payment, or threaten arrest. Taxpayers should not rely on AI-generated responses to complex tax questions, and they should verify any calculations or information provided by artificial intelligence.

3. Fake charities. Fraudsters often exploit tragedies and disasters by creating fake charities to collect donations and personal information. The IRS is committed to preventing fraudulent nonprofits from taking advantage of the American taxpayer.

Taxpayers who give money or goods to a charity may be able to claim a deduction on their federal tax return if they itemize deductions, but charitable donations only count if they go to a qualified tax-exempt organization recognized by the IRS.

4. Misleading tax advice on social media. Viral “tax hacks” can push taxpayers to file returns with false information or claim credits they don't qualify for, leading to refund delays, audits, penalties, or worse. The IRS continues to warn that social media-driven misinformation and disinformation remain a major driver of tax scams.

The IRS and the Coalition Against Scam and Scheme Threats warn taxpayers not to fall for these scams, and urge them to follow trusted advice from the IRS, tax professionals, and other reputable sources. The IRS reminds taxpayers who knowingly file fraudulent tax returns that they could potentially face significant civil and criminal penalties.

5. Identity theft involving IRS Online Account access. Criminals may attempt to use stolen personal information to gain unauthorized access to a taxpayer's IRS online account or may pose as helpers to collect sensitive information during account setup. Taxpayers should create their account directly through IRS.gov and should not rely on unsolicited third parties offering assistance. The IRS provides official guidance to help taxpayers securely establish and protect their accounts.

6. Abusive undistributed long-term capital gains claims. The IRS identified an increase in the abuse of Form 2439. This form allows shareholders of certain investment funds or real estate trusts to claim a refundable credit for taxes paid on undistributed capital gains. Identified schemes involve overstated or fabricated Form 2439 claims, including claims tied to organizations that are not legitimate investment funds or real estate trusts. The IRS has also seen fake claims falsely linked to real, well-known organizations. Improper claims may result in refund delays, audits, penalties, or enforcement action.

7. Bogus “Self-Employment Tax Credit” promotion. Scammers use misleading claims about a broad “self-employment tax credit” to encourage inaccurate filings and generate improper refunds. The IRS reminds taxpayers to rely on trusted sources and qualified tax professionals, not social media promotions, when determining eligibility for credits.

Many taxpayers do not qualify for these credits, and the IRS is closely reviewing claims coming in under this provision, so taxpayers filing claims do so at their own risk.

8. Ghost preparers. A “ghost” preparer prepares a return but refuses to sign it and/or refuses to include a Preparer Tax Identification Number (PTIN). When a preparer refuses to sign or provide a PTIN, that is a major red flag; the taxpayer is legally responsible for what is filed. The IRS urges taxpayers to avoid preparers who will not sign the return and to choose reputable help. Taxpayers should never sign a blank or incomplete return. Instead, the IRS reminds taxpayers to use a trusted tax professional for help.

9. Non-cash charitable contribution schemes. Some schemes involve inflated appraisals of donated property using syndicated conservation easements or art. Promoters often promise to eliminate or substantially reduce tax liability. The IRS warns taxpayers not to file returns with made-up information and reminds taxpayers that it can hold refunds while verifying claims.

10. Overstated withholding schemes (fabricated wage/withholding data). Scammers encourage taxpayers to inflate withholding amounts (sometimes described as “other withholding”) to manufacture a larger refund by reporting zero or little income on incorrect forms. The IRS may delay processing while it verifies wages and withholding against third-party records. Inaccurate claims can lead to penalties and enforcement action.

There are multiple variations of the overstated withholding credit scheme, including those involving Forms W-2 and W-2G; Forms 1099-R, 1099-NEC, 1099-DIV, 1099-OID, and 1099-B, as well as the Alaska Permanent Fund Dividend, Schedule K-1 with Withholding Reported, and Unspecified Source of Withholding Credit Claimed.

11. Spear-phishing and malware campaigns targeting tax professionals. Tax professionals and businesses remain targets of “new client” or “document request” emails that deliver malicious links or attachments to steal client data or access systems. The IRS and the Security Summit urge preparers to remain vigilant and to strengthen their security practices.

Businesses and individuals, including tax pros, should always be cautious and look out for any suspicious requests or unusual behavior before sharing any sensitive information or responding to an email. Warning signs may include unexpected requests for sensitive information, mismatched or unfamiliar sender addresses, urgent payment demands, or links directing users to websites that do not clearly originate from IRS.gov. Be aware that by gaining access to a hacked email account, scammers can locate a genuine email from a previous victim's email account sent to their tax professional.

12. Aggressive or misleading Offer in Compromise marketing (“OIC mills”). The Offer in Compromise program can help certain eligible taxpayers resolve tax debt when they are unable to pay in full, but “OIC mills” often overpromise results and charge high fees to taxpayers who don't qualify. Taxpayers can check eligibility using free IRS tools to avoid high-pressure sales tactics.

How to protect yourself and what to do if you get a suspicious message or call

• Don't click unexpected links or open unexpected attachments.
• If you get a suspicious IRS-related call, hang up. The IRS provides guidance on what to do next, including how to report scams.
• To report suspected IRS-related phishing emails or messages, send them to [email protected] and follow IRS reporting instructions.
• If you think your tax identity has been compromised, visit IRS.gov/idtheft for steps to protect your account and recover.

This article provides general educational information and is not specific legal or tax advice. Tax rules and enforcement priorities change, and every strategy should be evaluated against current law and the taxpayer's specific facts by your own advisors. Attorney Ike Devji has over 20 years of legal practice experience devoted exclusively to Asset Protection planning for business owners, real estate investors, entrepreneurs and specialty physicians.