The IRS received a budget increase from President Obama and congress to help with tax compliance earlier this year. The IRS is using those funds wisely.
Doug Shulman, the IRS Commissioner made a speech at a Conference recently announcing a few changes or increased efforts regarding offshore accounts including a new “Global High Wealth Industry” group which will “centralize and focus IRS compliance expertise involving high-wealth individuals and their related entities.” The IRS is basically looking at how other countries have setup and effectively tracked high net-worth individuals. Right now the definition of a high net-worth individual hasn’t been defined, but Schulman suggested those individuals with “tens of millions” of dollars.
The IRS is set to hire hundreds of employees who have experience working with wealthy individuals. It has already begun hiring agents, flow-through specialists, and international examiners, who will be “conducting” reviews of rich US taxpayers. Moreover, the IRS also will be setting up new Criminal Investigation offices in Panama City, Beijing, and Sydney.
For those taxpayers who are staying under the radar, it is better to report foreign earnings and get into compliance now before the matters get worse. It is in your best interests as a taxpayer to amend tax returns or file tax returns that have not been filed before the IRS finds you as IRS penalties and interest will continue to accumulate. As Mr. Schulman states, “for individuals with overseas income and assets, it’s straightforward. If you are a U.S.individual holding overseas assets, you must report and pay your taxes or we will be increasingly focused on finding you.”
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