Scam-2: Abusive Roth IRAs

Since the filing deadline is also the due date for individual retirement account contributions, it is prime time for scams that incorporate retirement plans. In this version, new to the IRS annual scam list, advisers encourage taxpayers to shift undervalued assets to Roth IRAs. This ploy, which the IRS has been tracking for years, typically involves a business in which the owner also creates a separate corporation with shares that are owned or acquired by the taxpayer's existing Roth IRA. Subsequent transactions involving the IRA and the corporation, says the IRS, are designed to allow the taxpayer to put in more than the annual maximum IRA contribution limit, meaning otherwise taxable income escapes taxation.

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