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Audits From Hell Target Rich

An Internal Revenue Service unit set up to look at wealthy taxpayers and their complicated financial arrangements has started rigorous probes of some hedge-fund managers and other investors it suspects may be trying to evade taxes.

The reviews performed so far have been particularly harsh, say Miami Accountants. Investors are being asked to turn over numerous hard-to-get documents in short order. These are the audits from hell that your grandfather warned you about.

The IRS unit, known as the Global High Wealth Industry Group, was set up last year. It began conducting audits earlier this year—but tax accountants say the group is only recently getting up to speed. The unit is headed by Donna Hansberry, a longtime litigator for the tax agency who was formerly a senior legal adviser on the IRS commissioner’s staff.

Rarely has the agency conducted audits of the wealthy and their businesses or investments in the same way as it looks at large companies, according to advisers. Now, though, these individual audits will be in the hands of agents who have worked on coordinated corporate audits. Given their experience and sophistication, according to advisers, the agents will be better at unearthing trouble.

IRS spokeswoman Michelle Eldridge says the group is looking at “individuals who have a complex set of situations, and looking at the complete financial set up.” She acknowledged that “these cases are full audits.”

The IRS group is focusing on many kinds of financial instruments and asset classes, from derivatives to real estate—such as, say, a stake in a winery in Europe—as well as trusts, royalty and licensing agreements, revenue-based or equity-sharing arrangements, private foundations, privately held companies and partnerships.

The wealthy often make sophisticated business and investment arrangements with complicated legal structures and tax consequences. These can involve other family members or business associates, and can be difficult to map. Some are simply mechanisms to avoid taxes, while others legitimately protect assets, promote charitable causes or defer income.

Tax advisers say they are being given very little time to help clients comply.

Gustavo A Viera CPA

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Gustavo A Viera CPA - Gustavo A Viera, a Miami CPA, is a Licensed CPA in Florida with a Masters in Taxation. A Miami CPA Firm in for more than 25 years. His Miami Accounting firm was founded in 1983. Small business accountants serving a wide array of clients in a variety of industries. One Alhambra Plaza Floor PH Coral Gables FL 33134 (786) 250-4450

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