On June 18, 2020, Douglas O’Donnell, Commissioner of the IRS Large Business and International Division (LB&I), announced that on July 15, 2020, the IRS will begin a new campaign to audit hundreds of high-net-worth individuals. The IRS maintains a specialized, experienced group of examiners solely focused on conducting audits of high-income/high-wealth taxpayers—the Global High Wealth Industry Group (GHW) of the LB&I division (commonly referred to as the IRS “Wealth Squad”). The Wealth Squad is specially trained to examine complex domestic financial affairs, offshore accounts, foreign trusts, and entities controlled by the taxpayer, including partnerships, corporations, foundations, and trusts.
THE WEALTH SQUAD
GHW examines the complete financial picture of high-wealth individuals and the enterprises they control. In announcing the formation of the Wealth Squad, then-IRS Commissioner Douglas Shulman stated, “For a variety of reasons—including valid business reasons—many high-wealth individuals make use of sophisticated financial, business, and investment arrangements with complicated legal structures and tax consequences.” The IRS believes these practices often mask aggressive tax strategies.
WHAT IS THE WEALTH SQUAD LOOKING FOR?
The Wealth Squad audit focuses on the taxpayer’s entire economic picture and assesses tax compliance across all income sources. GHW audits are generally very broad and comprehensive—consisting of a key case, generally an individual income tax return, and related income tax returns of an entity where the individual has a controlling interest, such as a C corporation, S corporation, partnership, private foundation, or trust. ...Login to see the whole story
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