The IRS has a Special Audit Squad for the Rich
Saturday was the 1st day of Q-4, a time of financial reckoning, when businesses move to make quotas and reach year-end targets.
Corporations and individuals alike rush to cut the income tax they will need to pay next year.
Last year the IRS collected $6.3-B assessing taxpayers for under reporting income. What the services calls the big fish, are chased by the IRS equivalent of a SWAT team.
It is called the Global High Wealth Industry Group, and it falls under the Internal Revenue Service’s Large Business and International Division. It is dubbed, “The Wealth Squad”.
The sepcial unit, launched in Y 2010, aims to “take a holistic approach in addressing the high wealth taxpayer population; to look at the complete financial picture of high wealth individuals and the enterprises they control, ” according to a description in an IRS revenue manual. The unit’s cases involve an individual’s tax return “and related income tax returns where the individual has a controlling interest and significant compliance risk is deemed to exist.” Things that can get sucked into these cases include “interests in partnerships, trusts, subchapter S corporations, C corporations, private foundations, gifts, and the like.”
Any audit of Donald Trump’s tax returns, for example, would be by the Wealth Squad.
The Big Q: What are these IRS examinations like?
The Big A: Tax experts described them as “the audits from hell that your grandfather warned you about.”
The team’s members are “highly capable, experienced examination specialists, which include technical advisers to provide industry or issue-specialized tax expertise, specialists regarding flow-through entities such as trusts, partnerships, LLCs, international examiners, economists to identify economic trends within returns, valuation experts and others.
As of Y 2013, almost 25% of taxpayers whose adjusted gross income topped $10-M were audited.
The Wealth Squad is super focused on the Top 50% of the 1%’rs.
One area the Wealth Squad is always interested in is aircraft and whether it is “being adjusted for correctly. There are ways of accounting for personal use whether you are an employee or not. Personal aircraft and charitable contributions are 2 particular areas of interest.
Airplanes generate very large deductions in terms of depreciation and expenses relative to the income that taxpayers would have to pick up if they are using simple computations.
One way the IRS investigates is by looking at the logs of corporate aircraft.
The unit also wants to see where the taxpayer sits with respect to all the entities that he/she controls, and there is always a focus on maintaining the integrity of that structure.
It is now Fall, so take a good hard look at your jet plane logs, and the integrity of your business structure/s. Because when it comes to the IRS Wealth Squad, “Be Prepared” is the Marching Song.
Have a terrific week.
Latest posts by Paul Ebeling (see all)
- Travel: Essex, Countryside and Coastlines - May 29, 2017
- Have We Chosen Convenience Over the Health of Our Pets? - May 29, 2017
- Women in President Trump’s White House are Seen and Heard - May 29, 2017