If you are a high-income taxpayer in Georgia, you need to be aware that the IRS has plans to audit more returns from upper tax brackets. While most of the audits do occur on tax returns of the wealthy, the IRS has not performed nearly as many audits as it did in previous years. Collectively, these taxpayers owe billions of dollars to the IRS as the nation’s tax gap grows.
The IRS is not conducting enough audits
The Inspector General from the Department of Treasury has already condemned the IRS for not conducting enough audits of high-wealth taxpayers. The IRS has a special audit unit for these taxpayers that knows how to turn up the heat during an inspection. This group looks at each taxpayer holistically to examine their overall financial picture. However, that group has been underutilized.
The IRS is specifically looking into partnerships
Here, the focus will be on partnerships and pass-through entities. The 2017 tax cut bill as well as the repeal of certain partnership rules prompted some taxpayers to restructure their holdings. The IRS wants to know more about this. In addition, the intent of 2015 legislation was for the agency to increase its high net worth audits. It remains to be seen when the IRS will actually increase the audits, given the other demands on the agency right now. Nonetheless, wealthier taxpayers need to be on notice of the IRS’ intentions in this area.
If you are a taxpayer who has received the dreaded letter from the IRS asking for more information, you need an audits attorney to help guide you through the process. A tax audits attorney could help guide you through how to respond to the IRS and could help you negotiate with the agency if it is possible to reach a settlement.