IRS Program | TaxConnections

Access Leading Tax Experts And Technology
In Our Global Digital Marketplace

IRS to establish special pass-through organization to help with high-income compliance efforts; new workgroup to blend current employees and new hires to focus on complex partnerships, other key areas

As work continues to focus more attention onto high-income compliance issues, the Internal Revenue Service announced plans to establish a special area to focus on large or complex pass-through entities.

The new work unit will be housed in the IRS Large Business and International (LB&I) division. In addition, the new pass-through area will include the people joining the IRS under the new IRS hiring initiative announced last week. As part of larger transformation work underway at the IRS, the Internal Revenue Service last week announced the opening of more than 3,700 positions nationwide to help with expanded enforcement work focusing on complex partnerships, large corporations, and high-income and high-wealth individuals.

“This is another part of our effort to ensure the IRS holds the nation’s wealthiest filers accountable to pay the full amount of what they owe,” said IRS Commissioner Danny Werfel. “We are honing-in on areas where we believe non-compliance among our wealthiest filers has proliferated over the last decade of IRS budget cuts, and pass-throughs are high on our list of concerns. This new unit will leverage Inflation Reduction Act funding to disrupt efforts by certain large partnerships to use pass-throughs to intentionally shield income to avoid paying the taxes they owe. These efforts are consistent with our broader commitment to use Inflation Reduction Act dollars to end the era of historically low error rates for wealthy and large entities, while making sure middle- and low-income filers continue to see no change in audit rates for years to come.”

Following a top-to-bottom review of enforcement efforts, the IRS announced on Sept. 8 the start of a sweeping, historic effort to restore fairness in tax compliance by shifting more attention onto high-income earners, partnerships, large corporations and promoters abusing the nation’s tax laws.

Written by TaxConnections Admin | Posted in High-Income Compliance Efforts • IRS Program • Passthrough Entities

The LB&I Commissioner, Douglas O’Donnell said that from July 15th to September 30th 2020, the IRS is expected to review several hundred tax returns as part of its global high-wealth, GHW Program which looks at high-income individuals and the businesses they control. The cases will focus on high income taxpayer’s pass-through businesses and related tax returns where the individual has controlling interest. Commissioner O’Donnell stated this in a New York University Tax Controversy Forum.

According to information provided by the IRS:
GHW was formed to take a holistic approach in addressing the high wealth taxpayer population; to look at the complete financial picture of high wealth individuals and the enterprises they control. A GHW enterprise case consists of a key case, generally an individual income tax return, and related income tax returns where the individual has a controlling interest and significant compliance risk is deemed to exist. Controlling interest can include significant ownership of or significant influence over an entity or multiple entities within the enterprise. The enterprise case may include interests in partnerships, trusts, subchapter S corporations, C corporations, private foundations, gifts, and the like. GHW personnel work with other personnel from other business operating divisions within the IRS to address noncompliance across the entire enterprise. GHW consists of two functions, Workload Services (WLS) and the field examination groups.
The GHW is responsible for business and financial enterprises controlled by individuals with assets or earnings in the tens of millions of dollars. LB&I Compliance, Planning and Analytics (CP&A) has primary responsibility for overall coordination of the Annual Examination Plan and workload identification.
Read More