New IRS Enforcement Unit Targets the Rich

On Monday the Internal Revenue Service announced the development of a new enforcement unit specifically designed to target the super rich. The goal of the new unit will be to help the IRS decode partnerships, offshore trusts and other complex techniques used to hide income.

Yesterday this blog wrote about how when it came to credit scores, the wealthy were pretty much treated the exact same as regular folks. Today we’re going with the flip side and showing a way that they are treated much differently. That would be in regards to taxes. The IRS however is looking to step up their game a bit and go after these people that seem to have slipped by more than they should for so long.

Today, The Wall Street Journal has an excellent article entitled “IRS Brings New Focus to Auditing the Rich”. The article describes exactly what the IRS hopes to achieve with this new unit, which they have dubbed the Global High Wealth Industry group.

According to IRS commissioner Doug Shulman, the unit’s first step will be to launch “a small number” of audits targeting individuals with income or assets in the tens of millions of dollars. These audits are set to begin as soon as possible, most likely sometime in the next month.

This seems to mark a new direction in the IRS approach. For far too long, the extremely wealthy had been the group most equipped to take advantage of numerous tax breaks and loopholes that are made available by their sheer size.

“You cannot assess compliance among the nation’s wealthiest individuals by looking only at their 1040s [tax returns],” Mr. Shulman said. “Our goal is to better understand the entire economic picture of the enterprise controlled by the wealthy individual and to assess the tax compliance of that overall enterprise.”

The IRS has now noticed that there is probably a whole lot of money being left out on the table out there that they could claim. It always seemed odd to me that the people that had the most ability to pay the IRS, were at the same time almost treated the most leniently.

There seems to be an impression that tax evasion has largely been almost swept under the rug by the IRS in regards to the wealthiest of Americas. Sure they go after MC Hammer and his debt or Nicolas Cage and his troubles, but these cases seem to be more for the media to me. The IRS wants the American public to see that their doing their job. However, I do feel that the impression is there that the super rich fill their tax returns with write offs and tax breaks and don’t really pay what they should. Now granted, I don’t know what the exact numbers are, but I do know what public perception is. Public perception certainly is that the super wealthy don’t pay the same percentage of their income back in taxes. It might have to do with the fact that they can hire the best accountants, but that certainly doesn’t make it right.

I have to applaud the IRS for this new enforcement unit, and hope that its actions go in line with the lofty goals that it has set. There really is no way that our government should be forced to cut spending on worthwhile efforts and programs, while these people are able to write off money that could be used to support the programs. If this is one of President Obama’s steps in the redistribution of the wealth, I’m all for it. Its really nothing new, just simply asking the super rich and their complex income and assets setups to pay what they rightfully owe. Doesn’t sound all that groundbreaking to me.