Virginia Tax Lawyer Takes a Look at the IRS Wealth SquadNews
Posted in on October 31, 2016
Last year, the Internal Revenue Service was able to collect $6.3 billion in unreported income, fines, and penalties from taxpayers who did not pay all taxes due. Much of the unreported income came from audits of wealthy individuals. As of 2013, close to 25 percent of taxpayers with adjusted gross income above $10 million are audited annually. Targeting the wealthiest individuals for investigations tends to result in the IRS being able to collect large sums of money from taxpayers who underpaid significantly.
For the very wealthiest clients who are targeted with an audit, the audit process is very different from the standard audits most people experience. There is a special subset of IRS investigators, called the Global High Wealth Industry Group, which is a part of the Large Business and International Division of the IRS. This Group is also called the “Wealth Squad” and it launched in 2010 to create a team of highly-specialized individuals who “take a holistic approach in addressing the high wealth taxpayer population.”
If you are under investigation by the Wealth Squad, you can expect that investigators will look at your “complete financial picture” including the enterprises which are under your control. Bloomberg reports that the audits conducted by the wealth squad are considered “audits from hell,” because they are so invasive and burdensome. You need a Virginia tax lawyer to help you through as you deal with this invasive look at your personal financial situation.
What Does the IRS Wealth Squad Do?
When the Wealth Squad conducts an audit, the investigators do not just look at the individual tax return which has been submitted by the wealthy individual. They also look at any related income tax returns for organizations, foundations, and other entities which the taxpayer has a controlling interest in.
If there is a significant compliance risk of any of these other entities, all financial information from the entity can be reviewed, along with personal financial information. This can include partnership interests, S-corps, C-corps, trusts, private foundations, and gifts which the wealthy individual has made.
When the Wealth Squad conducts an investigation, technical advisors are brought in who can provide industry-specific information on tax issues. There are specialists on the Wealth Squad who focus on flow-through entities, and there are international examiners who can help to look at the whole picture of financial wealth.
There are even valuation experts on the team, along with economists who become involved so they can identify economic trends within returns. Charitable contributions and the treatment of aircrafts are of particular interest to the Wealth Squad, although all aspects of a taxpayer's financial situation are reviewed.
The Wealth Squad primarily focuses on conducting audits of the top 50 percent of people in the one percent, which is a very small group of taxpayers. There is a lot of money at stake at this level, and it is very important to be represented properly by a Virginia tax attorney like Kevin Thorn if you find yourself the target of the Wealth Squad. Of course, an audit is a big problem for any taxpayer, and all individuals who are audited should get legal help to guide them through dealings with the IRS.Share This Post