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tax shelter

A tax shelter is a financial method or investment scheme that is created primarily to reduce or delay a person’s or businesses taxable income or tax liability . Common tax shelters include retirement accounts like a 401k , which allows an individual to defer taxes until they withdraw that income from their accounts. However, abusive tax shelters, or tax evasions , are regulated by the IRS and federal statutes , and promoting abusive tax shelters is punishable by fine.

For more information regarding the registration of tax shelters, please visit 26 CFR § 301.6111-1T - Questions and answers relating to tax shelter registration , and 26 U.S.C. § 6112 .

See also: IRS – Abusive Tax Shelters and Transactions .

[Last reviewed in November of 2024 by the Wex Definitions Team
]

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