On behalf of Silver Tax Group posted in IRS Tax Audits on Monday, October 3, 2016.
If you are a corporate executive, business owner with significant assets, or just happen to be wealthy, you may face an increased chance of an IRS tax audit. One unit under the Internal Revenue Service’s Large Business and International Division is the Global High Wealth Industry Group.
Known as “The Wealth Squad,” this group focuses upon wealthy taxpayers by looking “at the complete financial picture of high wealth individuals and the enterprises they control.” This unit reviews closely a taxpayer’s interests in partnership interests, various trusts, S corporations, C corporations and involvement in private foundations.
In 2013, nearly a quarter of taxpayers with adjusted gross income over $10 million or more faced tax audits. An IRS audit is an intimidating process under any circumstances. Especially when you are a holder of significant financial interests, there may be significant demands for documentation. The IRS sifts through these documents thoroughly.
One area the Wealth Squad seems particularly interested in is the ownership of airplanes. Because there are large deductions for airplanes concerning depreciation, the Wealth Squad closely scrutinizes how much the use of the planes concern personal use. This includes looking at the flight logs for use of corporate aircrafts.
What should you do facing an audit
A past chairman of an IRS Advisory Council referred to these reviews as “the audits from hell.” Knowing you are the target of such an audit may also mean you face significant penalties and criminal prosecution. It is therefore important to have on your side experienced legal representation who understands tax law and your rights when facing the tax audit process. Such counsel can also advise you on ways of reducing your chance for an audit.