The effects of tax evasion just keep rolling in. Widespread abuse of the tax system by some wealthy taxpayers has prompted the IRS to adjust their audit priorities. The Wall Street Journal ran a story stating the IRS has already begun intensive examinations through a new investigation unit. The IRS assigned its top investigators to the Global High Wealth Industry Group and their marching orders? Go after hedge-fund managers, investors and anyone else who might use complicated tactics to evade their tax obligations.
What does this mean? If you’re a wealthy taxpayer, watch out! These auditors are aggressive, relentless, and ready to dive deep into your finances.
The reviews performed so far have been particularly harsh, say attorneys. Investors are being asked to turn over numerous hard-to-get documents in short order. These are "the audits from hell that your grandfather warned you about," says Charles P. Rettig, a partner at Hochman, Salkin, Rettig, Toscher & Perez in Beverly Hills, Calif.
The IRS unit, known as the Global High Wealth Industry Group, was set up last year. It began conducting audits earlier this year—but tax attorneys say the group is only recently getting up to speed. The unit is headed by Donna Hansberry, a longtime litigator for the tax agency who was formerly a senior legal adviser on the IRS commissioner's staff.
Rarely has the agency conducted audits of the wealthy and their businesses or investments in the same way as it looks at large companies, according to advisers. Now, though, these individual audits will be in the hands of agents who have worked on coordinated corporate audits. Given their experience and sophistication, according to advisers, the agents will be better at unearthing trouble.
Miriam L. Fisher, a tax attorney and partner at law firm Morgan Lewis in Washington, says the audit teams comprise "A-list examiners" drawn from around the country who are knowledgeable and experienced with various financial products and industries. The audits are so intensive that each team is handling only a few right now and they aren't far along in the process, she says.