IRS Global High Wealth audits, delinquent international information returns, and Form 8300

Examinations

IRS Global High Wealth audit campaign

When the IRS’ People First Initiative concluded on July 15, 2020, the IRS began a new audit campaign to examine high-net-worth individuals, return preparers and other professionals. The Global High Wealth Industry Group (GHW) of the Large Business and International division (commonly referred to as the IRS “Wealth Squad”) will lead this new campaign.

The Wealth Squad is a specialized group within the IRS that examines complex domestic financial affairs, offshore accounts, foreign trusts and entities controlled by the taxpayer, including partnerships, corporations, foundations and trusts. These examinations are expected to target several hundred individuals with assets or earnings exceeding $10 million, or more than $100,000 of projected tax due. The initiatives focus on the following taxpayers and transactions:

1. High-income individuals with foreign assets: The Wealth Squad may request documents relating to these foreign assets such as foreign bank accounts, offshore retirement accounts, foreign trusts, business interests in entities holding foreign accounts, and any assets or monies inherited from foreign sources. Another focus of these examinations is to give the IRS a complete financial picture of the taxpayer and the enterprises that they control.

2. Private foundations related to high-income individuals: The IRS has identified more than 1,000 private foundations as potential audit targets. These foundations are often abused by high-net-worth individuals to shield income or assets from taxation.

3. Licensed professionals involved with conservation easements or micro-captives: On June 18, 2020, Brendan O’Dell, the coordinator of IRS promoter investigations, announced that the IRS is targeting professionals who promote tax shelter activities. This includes attorneys, accountants, financial advisors and appraisers.

4. Return preparers with unfiled returns: