The IRS's Global High Wealth Industry Group (GHWI Group) is auditing high-net-worth individuals (HNWIs) using techniques developed in large business audits. This initiative targets U.S. taxpayers with international and/or domestic income or assets in the "tens of millions" and with "complicated" structures. The audit begins with the taxpayer's Form 1040, but then branches out to the taxpayer's gift tax returns as well as the income tax returns for any partnerships, trusts, or other entities from which income flows to the taxpayer.
While the GHWI Group only conducted 36 audits in its first 2.5 years, the IRS has renewed its efforts in 2013 and now has over 100 taxpayers under examination. The audits are fast paced and typically include dozens of Information Document Request (IDR) questions. The work of the GHWI Group demonstrates a level of coordination within the IRS that has not been seen previously. Caplin & Drysdale's Private Client and Tax Controversies Team is uniquely well situated to assist taxpayers who are subject to this type of examination, with decades of experience representing individuals on complex tax issues.