What’s scarier than zombies, clowns, or vampires? The dreaded Global High-Wealth Industry Group, a/k/a the IRS’s “Wealth Squad.” The Wealth Squad is comprised of examiners and other professionals whose sole job is to conduct compliance reviews on the wealthiest 1% of taxpayers. These professionals include specialists on flow-through entities such as trusts, partnerships, and LLCs, international examiners, economists, appraisal experts, and technical advisers. In our experience with the Wealth Squad, these IRS experts have a surprising range of knowledge about financial instruments and a high level of sophistication. Last year, the IRS assessed $6.3 billion in taxes on initially underreported income, in part due to the Wealth Squad’s handiwork.
Wealth Squad examiners review wealthy taxpayers’ returns and other documentation to ensure that taxes are appropriately reported for individuals and complex pass-through and trust structures. Although sophisticated tax planning is often used for legitimate business purposes, the Wealth Squad is designed to uncover overly “aggressive tax strategies.”1
If you find yourself the subject of a Wealth Squad inquiry, we recommend contacting your attorney immediately for thoughtful tactical and strategic advice.
If you have any questions about this e-Alert, contact Ronald D. Kerridge at (214) 953-5774 or rkerridge@jw.com.
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1Remarks of IRS Commissioner Douglas Shulman before the AICPA National Conference on Federal Taxation, Oct. 26, 2009, Doc 2009-23542, 2009 TNT 205-22.