Red Flags for IRS Wealth Unit

10:26 pm Tax Planning

IRS Logo 150x150 Red Flags for IRS Wealth UnitAccording to a recent Barron’s article, the IRS’ new Global High Wealth Industry unit is ramping up to recoup some of the $350 billion in taxes that the government estimates is due but not collected every year.  The article notes several red flags that may trigger an audit:

Property transfers – as we have reported here previously, the IRS is scrutinizing state property transfer records to see if corresponding gift returns have been filed.  Since gifting property has become more popular as housing values started declining five years ago, this strategy may yield some results for the IRS.

Some investment losses – the agency is scrutinizing investment losses claimed by owners of Subchapter S corporations or partnerships to ensure that investors who claimed losses were actively involved in the business.

Home loan interest deductions – if your home loan deductions exceed $70,000, the IRS is inclined to take a second look.

Foreign income – the IRS is demanding the names of U.S. clients from foreign banks and investment firms.  Now that the amnesty program for taxpayers with unreported foreign income has expired, those who did not report may face stiff penalties.

Big spenders – the IRS is cross-referencing taxpayers’ reported income with credit card records in hopes of snagging unscrupulous filers of Schedule C, which reports on business profits and losses.  The agency estimates Schedule C filers report just 57 percent of their income each year, which equates to $68 billion in unpaid taxes.

Contact us today for individualized planning strategies to meet your unique needs.

Leave a Comment

Your comment

You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Please note: Comment moderation is enabled and may delay your comment. There is no need to resubmit your comment.