NEW YORK, NY--(Marketwire - October 27, 2009) - For high-net-worth individuals, the knock on
the door during dinner may not be a friend, or a neighbor, or a Girl Scout
selling cookies. It may be a team of IRS agents -- and they might be backed
by local police, state police or even the FBI. Tough economic times have
sent U.S. tax authorities on an aggressive revenue drive. In fact, it has
been reported that the IRS has set up a new enforcement unit -- the Global
High Wealth Industry Group -- to target the very wealthy. They're
investigating taxpayers -- especially the wealthy and those with complex
finances -- as they search for unpaid and underpaid taxes.
"The economic downturn has put the IRS under pressure to close the revenue
gap," said
David Gannaway, a former IRS special agent who is now a
director in the Litigation and Corporate Financial Advisory Services Group
at New York accounting firm
Marks Paneth & Shron LLP. "At the same
time, wealthy individuals may have gotten more aggressive about their
investments as they try to restore lost capital. It's a recipe for
intensive enforcement, and that's what we're seeing."
Mr. Gannaway is available for interviews, and can also author a bylined
article that discusses:
- Which taxpayers are most at risk: High-net-worth individuals
are on the radar of the IRS and owners of closely-held and family-owned
businesses. In addition, S-corporations are of interest because they report
(and can under-report) their own income. Wealthy wage-earners with complex
investments may also be targeted.
- Why the pace of enforcement will step up this fall: Enforcement
efforts were already running at high volume as authorities sought revenue
to close the budget gap. With the end of voluntary disclosure of
foreign accounts on October 15, enforcement against undisclosed foreign
account holders will now begin in earnest.
- What taxpayers should do when the IRS knocks: When IRS CID and
FBI agents and police officers sweep into a home, it's meant to unnerve the
subjects and get them to talk. But that's not always advisable.
Individuals are entitled to consult with an attorney before answering
questions, but they often don't know this or don't know the ramifications
of talking with the agents.
- What taxpayers should tell their attorney. In a word,
everything. The attorney's job is to represent the taxpayer's interests.
In practice, that often means negotiating with the IRS. But negotiations
will likely not succeed if the attorney doesn't have complete
information.
- Why taxpayers should hire an experienced accountant -- and why he
should be someone new. An experienced accountant can play a central
role on the defense team. The accountant will concentrate on facts, while
the attorney focuses on negotiations and trial preparation. The taxpayer's
investigation should mirror the IRS', and an accountant who knows the IRS'
priorities and methods is the best person to guide it. Accountants can
advise on other steps, such as personal bankruptcy, which is sometimes
advisable. But the accountant should not be the person who the taxpayer
normally engages. A past relationship with an accountant will not be
protected by attorney-client privilege, and if the investigation
looks into past activities, the regular accountant will have to disclose
them. A legally privileged attorney/accountant relationship where
information can be shared confidentially is essential.
"There will be an intensive enforcement environment for some time to come,"
Mr. Gannaway says. "Individuals and organizations, and their
attorneys, need to make sure they are prepared for enforcement actions --
and that they have the right skills at the table."
For more information, to schedule an interview or arrange a bylined
article, please contact Adria Greenberg of Sommerfield Communications at
(212) 255-8386 or adria@sommerfield.com.
About Marks Paneth & Shron
Marks Paneth & Shron LLP is an accounting firm with nearly 500 people,
approximately 70 of whom are partners and principals. The firm provides
businesses with a full range of auditing, accounting, tax, bankruptcy and
restructuring services as well as litigation and corporate financial
advisory services to domestic and international clients. The firm also
specializes in providing tax advisory and consulting for high-net-worth
individuals and their families, as well as a wide range of services for
international, real estate, media, entertainment, nonprofit, professional
and financial services and energy clients.
The firm's subsidiary, Tailored Technologies, LLC, provides information
technology consulting services. In addition, its membership in JHI, the
leading international association for independent business advisers,
financial consulting and accounting firms, facilitates service delivery to
clients throughout the United States and around the world.
Marks Paneth & Shron LLP, whose origins date back to 1907, is the 32
largest accounting firm in the U.S., and the 15th largest in the New York
area. Its headquarters are in Manhattan. Additional offices are in
Westchester, Long Island and the Cayman Islands. For more information,
please visit
www.markspaneth.com.
Contact Information: Contact:
Adria Greenberg
Sommerfield Communications
212-255-8386
adria@sommerfield.com