Thursday, October 29, 2009

Bad News for the Rich and Shady

The IRS has announced that it has created a task force called "the Global High Wealth Industry group," targeting taxpayers who have assets or income in the tens of millions of dollars. The idea is that agents will be specially trained to ferret out highly complex financial arrangements like "royalty and licensing agreements, revenue-based or equity-sharing arrangements, private foundations, privately held companies, and partnerships and other flow-through entities that require looking at the entire, and often huge, spectrum of transactions and entities," says an IRS official.

At bottom, it sounds like there are two main triggers for all of this: someone with ownership of several related business entities, and individuals who invest in hedge funds that are set up, or raise money, offshore.

You can certainly understand why the IRS would want to take a closer look at those things to make sure people are paying their fair share. But on the other hand, shouldn't they already have tax agents who know how to dissect an equity-sharing arrangement or an offshore fund?

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