Wealthiest Face More Stringent Tax Audits

In the past, wealthy taxpayers’ sources of income included mainly wages, dividends, interest, and capital gains. Today, the wealthy taxpayers have many more complex methods of making money, such as through multi-tiered partnerships, trusts, hedge funds, and private foundations.

To expect one audit agent to verify a return with such forms of income is unrealistic. Thus, as IRS Commissioner Doug Shulman envisioned, the IRS is creating “wealth squads” to extensively examine the wealthiest taxpayers. A team of various experts will scrutinize each form of income, so people who fall into this category need to prepare themselves.

See Donald T. Rocen, IRS ‘Wealth Squads’ on the Way, Forbes.com, May 26, 2010.

Special thanks to Jim Hillhouse (Wealth Counsel) for bringing this to my attention.