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April 29, 2011 at 04:46 AM
The IRS launched the Large Business and International Division’s high-wealth industry group (“HNW Initiative”) in October 2009 with the purpose of examining high-net worth individuals for income tax compliance. But the Service may be “using more rhetoric than resources,” according to Syracuse University’s Transactional Records Access Clearinghouse (TRAC). TRAC’s April 14 report, based on information compiled from public records, accuses the IRS of having “very skimpy” audit goals for the HNW initiative.
The putative goal of the HNW initiative is to “take a unified look at the entire web of business entities controlled by a high wealth individual, which will enable [the IRS] to better assess the risk such arrangements pose to tax compliance and the integrity of our tax system.”
But TRAC’s report indicates that the HNW initiative plans on auditing only 122 returns for the 2011 fiscal year and claims that it will fail to meet even this modest target. According to the report, the IRS will meet only 19% of its audit objectives for the first six months of 2011.
The IRS vehemently disagrees with TRAC’s findings, saying that development of the initiative is continually progressing. In fact, the IRS reports that it is investigating 250 business entities— more than twice the amount quoted by TRAC.
