IRS Hires Hundreds to Go After Rich Tax Cheats
The IRS is in the process of hiring hundreds of new employees to go after rich tax cheaters. The unit is known as the IRS high wealth unit.
The IRS has changed its audit tactics since the turn of the century. Whereas it used to go after little guys for every penny it could get, the new view is that there is more to get by going after the wealthy. This is particularly true since the wealthy tend to get involved in strategies of dubious legality. When caught in the proverbial act, the taxes, penalties and interest can be significant.
So, what does the IRS high wealth unit actually do? It looks at strategies being used by targeted taxpayers to evade taxes using some red flag items. These items can include everything from offshore banks to international trusts to offshore factoring methods and more. There is currently a bill before Congress that would provide funding of $350 million dollars plus to fund the unit.
The IRS is not the only group that is creating this type of unit. States have been doing it for a while, but now we are seeing a move by a number of countries to form their own units. Countries such as Germany, Japan and the United Kingdom already have theirs up and running. This is leading to joint investigations and successful prosecutions of individuals using offshore banks in former stalwarts such as Switzerland and the various offshore islands catering to tax planning.
In the case of Switzerland, the bust of the UBS bank tax planning scheme has exposed 5,000 wealthy Americans to IRS scrutiny. While the investigation is not yet complete, the IRS has already recovered $780 million dollars in back taxes, penalties and interest payments. Given the fact governments across the world are hurting for funding, we can expect to see the IRS keep up its pursuit of the wealthy for the foreseeable future.