Saturday, November 13, 2010
Well-heeled investors, beware: The auditors are coming.
An IRS unit set up to look at wealthy taxpayers and their complicated financial arrangements has started rigorous probes of some hedge-fund managers and other investors it suspects may be trying to evade taxes.
The reviews performed so far have been particularly harsh, say attorneys. Investors are being asked to turn over numerous hard-to-get documents in short order. These are "the audits from hell that your grandfather warned you about," says Charles P. Rettig, a partner at Hochman, Salkin, Rettig, Toscher & Perez in Beverly Hills, Calif.
The IRS unit, known as the Global High Wealth Industry Group, was set up last year. It began conducting audits earlier this year—but tax attorneys say the group is only recently getting up to speed. The unit is headed by Donna Hansberry, a longtime litigator for the tax agency who was formerly a senior legal adviser on the IRS commissioner's staff.