IRS audit campaign of HNW individuals, related entities to launch on July 15
- By staff writer
The Internal Revenue Service will start examinations of several hundred high-net-worth (HNW) taxpayers beginning July 15, according to media reports and press releases by tax preparation companies with high-net-worth and large and international businesses.
These audits come in the wake of the IRS's continuing efforts to target the tax returns of HNW individuals and international entities, according to those familiar with the planned crackdown.
According to the reports, the examinations beginning on July 15 will look at partnerships, private foundations, trusts and other similar types of structures typically favored by "sophisticated" taxpayers.
The reports cited as their source of the news of the crackdown a formal announcement last month by the IRS Large Business and International (LB&I) division commissioner Douglas O’Donnell.
According to Andersen, the San Francisco-based organization of legally-separate tax and legal services firms that evolved out of a part of the now-defunct Arthur Andersen accountancy, O'Donnell's annoncement followed on from a statement in March by Treasury Secretary Steven Mnuchin’s statement in March at a Ways and Means committee hearing that he had directed IRS Commissioner Charles Rettig to increase the funding in such a way as to audit more high-income earners.
In both its 2019 and 2020 Audit Plans, the Treasury Inspector General for Tax Administration (TIGTA) recommended that the IRS make targeting enforcement against high-income individuals who have failed to file U.S. tax returns a priority. In May, the TIGTA estimated that 34% of high-income non-filers owed an estimated US$45.7bn in taxes.
One report, meanwhile, noted that the IRS had not said what it regarded as a “high-net-worth” individual for purposes of this campaign.
To see an organizational chart of the IRS's Large Business and International division, click here.
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