An abusive tax shelter is a scheme or arrangement created mainly to avoid or illegally reduce taxes without real economic purpose.
It usually:
Creates artificial losses
Uses complex transactions with no real business activity
Exploits loopholes in tax laws
Tax authorities treat abusive tax shelters as illegal or improper, and penalties may apply.
In simple terms, an abusive tax shelter is a fake or unfair method used to avoid paying the correct amount of tax.


