Thursday, June 24, 2004

In Notice 2004-45 and accompanying press release, the Treasury Department and IRS today warned taxpayers about a tax scam involving phony claims of Virgin Island tax benefits under sections 932(c) and 934(g):

The Internal Revenue Service is aware that certain promoters are advising taxpayers to take highly questionable, and in most cases meritless, positions … in order to avoid U.S. taxation and claim a tax benefit under the laws of the United States Virgin Islands (USVI). Promoters may also be advising taxpayers to take similar positions with respect to other U.S. possessions. This notice alerts taxpayers that the Service intends to challenge these positions in appropriate cases.