The IRS is warning about a tax scam that takes advantage of a U.S. tax treaty with Malta. Bad actors encourage U.S. taxpayers to make unlimited noncash contributions to Maltese individual retirement arrangements. Promoters may refer to them as “pension funds.” Participants usually contribute highly appreciated assets, which are then sold for cash. They’re told they can claim U.S. income tax exemptions on their earnings and distributions even though their assets typically are sold for significant gain. But the IRS says such claims are “improper” and the tax agency has included the scheme in its 2024 “Dirty Dozen” fraud list (https://bit.ly/3JK2eQh).
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