Recently, Douglas O’Donnell, the commissioner of the Internal Revenue Service’s Large Business and International Division (LB&I), announced that examinations of several hundred high-net-worth individuals will begin, with particular focus on owners of international holdings, closely-held entities, pass-through entities, and private foundations. He did not give a definition of a high net worth taxpayer.
These efforts will be conducted by the Global High Wealth Industry Group of the LB&I division, the group commonly referred to as the “IRS Wealth Squad.” This group looks at a taxpayer and all of their businesses in order to obtain a complete picture of a taxpayer’s tax and financial situation.
The examinations will be coordinated among various IRS groups and may result in examinations of all aspects of an individual’s personal and business operations.
Taxpayers should be prepared to assess what steps should be taken to prepare for, and defend against, such an examination. In addition, the existence of such a program should be taken into account when executing any tax planning strategies in the future.
Please contact your Citrin Cooperman advisor to discuss, or email us at firstname.lastname@example.org.