More Global High-Wealth Audits Expected Soon
The Commissioner of the IRS Large Business and International Division recently announced that the Global High Wealth Industry Group of the IRS will initiate several hundred audits of high-wealth individuals. The audits are expected to commence beginning July 15 when the suspension of certain examination and collection functions of the IRS is lifted.
A representative from the IRS also indicated that there may be an increase in audits of private foundations, in particular, in connection with loans from private foundations to disqualified persons.
The IRS has stated that it will take a holistic approach to the audit program and consider the complete financial picture of high-wealth individuals and the enterprises they control.
A global high-wealth audit can be an extensive audit of both the high-wealth individual and related entities, typically pass-through entities. In a global high-wealth audit, the IRS is generally less focused on specific issues and seeks to understand the whole enterprise of the high-wealth individual. The audits are generally lengthy and time consuming, as the IRS seeks to gather a large amount of information through extensive information document requests. The IRS may also bring in specialists to focus on specific issues, including the taxation of partnerships, trusts, S corporations, C corporations, private foundations, gifts and the like.
These audits can be very time-consuming and complicated and will require outside assistance.
The attorneys at Kleinberg Kaplan have significant experience in representing high-wealth individuals subject to a global high-wealth audit and other federal, state, and local tax audits generally. If you have any questions, please reach out to your primary Kleinberg Kaplan contact or a member of our tax department.