With the “People First Initiative” set to expire on July 15, 2020, the IRS is poised to resume a series of new audit initiatives aimed at high net worth individuals and return preparers. The initiatives focus on the following areas of non-compliance:
- High-income individuals who have not filed tax returns
This initiative will include personal home visits by IRS Revenue Officers. In addition to non-filers, private foundations are also under the microscope, as they can be subject to abuse by high net worth individuals.
- Private foundations
The IRS has identified more than one-thousand private foundations as potential audit targets. These foundations are often abused by high net worth individuals to shield income or assets from taxation.
- Licensed professionals involved with conservation easements or micro-captives
Brendan O’Dell, the coordinator of IRS promoter investigations, recently announced that the IRS is targeting professionals who promote tax shelter activities. This includes attorneys, accountants, and appraisers. Last year, the IRS mailed a time-limited settlement offer to certain taxpayers under audit who participated in abusive micro-captive insurance transactions, a type of transaction that has been under IRS scrutiny for several years. Taxpayers who declined these settlement offers will continue to be audited by the IRS under its standard procedures.
- Return preparers with unfiled returns
Return preparers have been in the IRS crosshairs for several years now. This has mostly included return preparer due diligence audits, as well as criminal referrals. The IRS will now also focus on return preparers who have failed to file their own tax returns. The Treasury Inspector General for Tax Administration (TIGTA) recently reported that 10,495 return preparers who prepared returns in 2016 failed to file their own personal tax return. The IRS has isolated the 100 worse offenders to target initially, before expanding to others.
These initiatives were temporarily halted as part of the “People First Initiative” caused by COVID-19, which suspended many IRS activities, including all in-person visits and meetings. While in-person activity is expected to remain suspended for the foreseeable future, the initiatives will otherwise resume.
If you have unfiled tax returns, or if you have been contacted by the IRS concerning an audit or collections matter, discuss your options with one of the experienced professionals in our IRS Defense professionals by calling (972) 818-5300.
Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article.