The long-planned effort by the Internal Revenue Service (IRS) to recover taxes due from the wealthy is underway, already netting the agency more than half a billion dollars.
As we discussed earlier, the Inflation Reduction Act did a lot for the IRS, including encouraging it to take sharp focus on high asset earners and corporations possibly paying less than their fair share. To that end, the IRS recently noted its progress in pursuing overdue taxes and outlined its efforts to do more.
In a press release, the IRS laid out its gains and upcoming enforcement plans:
- The agency is investigating overdue taxes owed by approximately 1,600 millionaires. Overall, the IRS claims it has collected $482 million from these taxpayers. The IRS will continue this effort into the future as it flexes new-found capabilities funded by the recent budget boost. Previously lacking the money to hire sufficient agents to parse and pursue delinquent high-wealth taxpayers, the IRS has now hired revenue officers who are managing the job handily.
- The use of artificial intelligence (AI) for enforcement under the Large Partnership Compliance (LPC) program should be of concern to individuals with holdings in that area. The IRS is expanding its audit track to include 75 large U.S. partnerships. Using data science and AI in an enforcement setting is likely to prove successful and is a long way from the linear gumshoe work on which the agency relied in the past. These partnerships each hold approximately $10 billion in assets and represent a wide swath of industries, including large law firms, hedge funds, real estate, and other partnerships.
- In the same light, the IRS is also growing its Large Corporate Compliance program. This program is looking at corporate taxpayers with average holdings of $24 billion along with an “average taxable income of approximately $526 million per year.” No small potatoes here. This is a category in which the IRS is also leveraging AI to identify an additional 60 audit targets in the near term.
The IRS also offered a selection of recent successful enforcement efforts including:
- A prison term of almost two years for filing a false tax return while acting as a money mule (carrier) for online scammers. The individual will pay $470,000 in restitution as well.
- In another successful tax fraud prosecution, the defendant received a prison term of more than four years for cooking the books of some Washington, D.C. area restaurants and concealing the money in shell accounts.
- Another defendant received more than 10 years in prison and restitution of $130,000 for his part in a RICO action involving tax fraud and cybercrimes.
IRS enforcement is rolling out as planned. If you have a questionable business structure or are engaged in a tax crime, it's time to come in from the cold—the IRS is heating up. Speak with reputable tax attorneys about your situation. Your options are usually better before the IRS has identified you for an audit or IRS criminal tax investigation.
Involved in a tax avoidance scheme or other tax controversy? Speak with our group of experienced criminal tax attorneys
Serving local and international clients from offices in Chicago and Cleveland, the tax firm of Robert J. Fedor, Esq., LLC offers aggressive legal defense if you are challenged by a civil or criminal IRS tax audit. Call 800-579-0997 or contact us today.
