According to this recent article in Forbes, the IRS has created a new enforcement unit to target high net worth individuals with complex holdings. This group is called Global High Wealth Industry Group or GHWIG. This is a direct attack at those with incomes over $100,000 per year.
The GHWIG has broken the income groups into 3 categories; $100k-$200k, $200k-$1m, and $1m+. From 2007-2008, there was a 24% increase of audits for those earning over $200,000 per year. The IRS has hired more than 4000 people to increase audit activity and pursue your assets for increase tax revenues.
It is critically important for you take make sure you keep good records for all of your business and investment activities. This is the easiest thing for the IRS to take advantage of. It is also important to make sure your asset are properly structured so that you are in full compliance. This should be revisited every year. And never talk to an IRS agent without proper representation. It is best to have a professional.
What the government doesn’t seem to understand is that the high earners in society are the productive business owners and employers. Anything done to make it more difficult to comply with the ever increasing regulations just removes incentives for the productive in society to continue to produce. Or worse, they just flee the country to more freedom friendly nations.
There is nothing illegal or immoral about legally protecting your assets and taking advantage of tax breaks available to you. But the government seems intent on constantly penalizing you for your efforts. Make sure you protect yourself from the risks.
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