IRS Wealth Squads
IRS Wealth Squads Target Wealthy Taxpayers’ and Hedge Funds, Trusts and Foreign Accounts with a highly capable team of experienced examination specialists.
Newly created IRS Wealth Squads exam teams will scrub wealthy taxpayers’ hedge funds, trusts, and foreign accounts. It is not recommended you represent yourself, hire an accountant.Those who by anyone’s measure would be considered wealthy should be on notice: How you acquired and now maintain the wherewithal to be so labeled may soon be called into question by the Internal Revenue Service. That’s not to say that the questions can’t be answered, and the matter closed with no further tax due, but the means to that end could get complicated.
Last Fall, IRS Commissioner Doug Shulman unveiled his vision for a Global IRS Wealth Squads Exam Group—the latest addition to the agency’s arsenal of compliance strategies. Its goal is to ensure that these high-end Form 1040 filers are not shirking their federal tax responsibilities. While the exact amount of “wealth” that will arouse IRS interest was not disclosed, the Commissioner suggested a threshold in the neighborhood of tens of millions of dollars. According to the most recently released IRS estimates, in 2004 there were approximately 47,000 individual taxpayers with a net worth of $20,000,000 or more.
Where does your net worth rank?
That some of these taxpayers play fast and loose with regard to federal taxes should come as no surprise, given the deluge of news stories last year revealing the extent to which the well-off in the U.S., as well as other countries, secreted assets in offshore accounts to avoid the prying eyes of revenue bodies worldwide. By last November, in the U.S. alone, almost 15,000 individuals had “voluntarily” reported to the IRS previously undisclosed foreign bank accounts. Hence the IRS Wealth Squads.
However, as troublesome as this behavior is, it alone is not the principal factor for this new program. Instead, it is the scope and complexity of the tax planning in which such individuals engage that challenges the current exam strategy and dictates a different approach for certain wealthy taxpayers. Gone are the days when Forms 1040 filed by such taxpayers reported for the most part, wages, dividends, interest, capital gains, and perhaps distributions from a law firm, accounting firm, business partnership, or small business corporation. Instead, they now often reflect the taxpayer’s participation in such ventures as multi-tiered partnerships, trust arrangements, private equity and hedge funds, and private foundations. To complicate matters from an IRS Wealth Squads exam perspective, many of these entities in whole or in part are foreign-based.
To expect one revenue agent to verify that a return reflects the proper tax treatment of such an economic enterprise is unrealistic. Thus, make way for the “IRS Wealth Squads” from the new Global High Wealth Exam Group. They will be armed with agents with the necessary skill sets to examine these situations in a holistic manner. In other words, the individuals as well as their related entities may be examined to ensure that not only income amounts but also the transactions and relationships from which they arise have been properly accounted for and reported for federal tax purposes. While it will take some time to get this organization fully staffed, there are exam teams already up and running.
IRS Wealth Squads Target Wealthy Taxpayers' and Hedge Funds
Tax Accountant said IRS delays start of tax season for individual returns would be postponed until February 17 with some as late as March
How Accountants in Miami Increase Client Satisfaction. If you are an Accountant not focused on improving your level of client satisfaction, you should be.