Niles Elber Comments on Recent IRS Enforcement in MarketWatch

Anyone on the receiving end of an IRS audit will say there’s never a good time to open up the books for Uncle Sam’s revenue agents.

That’s never felt more true, say people who’ve witnessed the Internal Revenue Service in action recently.

IRS auditors have more questions, more staff and are acting more assertive, according to lawyers and accountants who advise very upscale clients on taxes.

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Niles Elber, a Member at law firm Caplin & Drysdale, said IRS auditors seem willing to dig deeper these days. “I might describe it as eagerness,” he said. There are millions of dollars hanging in the balance in the tax cases he handles.

“I’ve been doing this a long time now,” Elber said. “When I first started, the agents I worked with usually concentrated on the most important things or the most important issues, usually with the most significant financial impact. And other things that were less significant were pushed by the wayside as a means of economizing. I’m not sure I see that now. Now, we’re going to drill down on everything.”

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Still, a common refrain about high-end IRS audits these days is that there are more people involved — and having more people means answering more questions.

Elber used to work with one or two IRS agents during an audit, with one being the lead agent and the other serving as a specialist or supervisor.

Now, the exam teams can have up to eight people, he said. He’s also noticed a new feature: recurring conference calls for updates on the audit. “Across the board, they are pushing hard now. They are moving cases along with deliberate speed,” Elber said.

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Caplin & Drysdale’s Elber said it’s a good thing if more IRS audits and investigations bring the system to a place where everyone is paying all their tax obligations. “You want there to be fairness and uniformity,” he said.

The trick is knowing when enough is enough — so there’s a balance the IRS needs to find within itself, he added.

“What I don’t believe in is grinding a taxpayer to dust and looking at every possible issue one could look at,” Elber said.

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