A recent ruling from a federal district court has put an end to deceptive tax practices involving charitable remainder annuity trusts (CRATs). Missouri CPA Aric Elliot Schreiner and his firm, Columbia CPA Group LLC, have been permanently barred from promoting these schemes, with Schreiner ordered to repay $400,000 in “ill-gotten gains.”
The court’s decision on May 3, 2024, marks another victory in the fight against CRAT schemes. Previously, the court had issued similar injunctions against other individuals and entities involved in promoting these schemes, including Rhonda Eickhoff, John Eickhoff Jr., and Hoffman Associates LLC.
The government’s lawsuit targeted defendants who were responsible for at least 70 CRATs, resulting in significant unreported taxable income and substantial tax revenue losses. The scheme involved inflating the value of contributed property, selling it, and using the proceeds to purchase annuities, which were then underreported or falsely reported as tax-free distributions.
The IRS has also identified CRAT abuse as one of its “Dirty Dozen” tax scams, emphasizing the seriousness of these deceptive practices. The Dirty Dozen list aims to raise awareness and protect taxpayers from falling victim to fraudulent schemes.
Charitable remainder trusts, when used correctly, can be valuable tools for tax planning. These trusts benefit both beneficiaries and charitable causes, allowing donors to receive tax deductions while supporting their favorite charities. However, it’s essential to ensure compliance with IRS rules and avoid schemes that promise unrealistic tax benefits.
The Department of Justice Tax Division continues to take action against tax fraud promoters and preparers. If you suspect someone of violating an injunction or engaging in fraudulent tax practices, you’re encouraged to report it to the Tax Division.
By cracking down on deceptive tax schemes and promoting compliance with tax laws, authorities aim to safeguard taxpayers and preserve the integrity of the tax system.