Carolyn Schenck Comments on Tiny-Home Tax Shelter Enforcement in Tax Notes

Want to help families displaced by natural disasters?

Invest in a collapsible housing unit offered by the Utah-based company BoxHouse.

You can rent the unit to government agencies like the Federal Emergency Management Agency, collect the rental income, and claim a big tax deduction for five times the amount of your cash outlay under President Trump’s One Big Beautiful Bill Act, according to the pitch.

In the worst case, the unit is never deployed or rented out. You can still use full bonus depreciation to wipe out your tax liability in a single year.

What sounds like a good deal might be too good to be true. If it is, buyers might get stuck with a large tax bill, penalties, and an underwater asset. But that's only if the IRS tries to stop it.
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Carolyn Schenck of Caplin & Drysdale said she could see this concept being part of or the subject of an IRS Large Business and International Division campaign, a type of enforcement strategy that is used to target areas of noncompliance for wealthy taxpayers and large businesses.

Schenck, who was IRS national fraud counsel until she left the agency in 2025, explained that the IRS has historically focused not just on taxpayers but also on promoters of tax strategies.

“If a transaction is being marketed . . . in terms of this dramatic tax savings, I think that the promoter obviously is going to become a sort of central focus or a potential target of an enforcement effort,” Schenck said.

Schenck said that the government has multiple goals in situations like this. One is to protect the fisc and the Treasury from a scheme that they deem to be abusive.

Another is preventing taxpayers from “going into these things to begin with, because at the end of the day . . . it’s the government who potentially misses out on tax, but oftentimes it’s the participant who loses also,” Schenck said.

To read the article in full, please visit Tax Notes’ website.