How the super-rich defeated the IRS's crack Global High Wealth unit

Boing Boing

In 2009, the IRS created a Global High Wealth Industry Group to audit the super-wealthy, staffing it with skilled lawyers and accountants who could unravel the webs of "trusts, foundations, limited liability companies, complex partnerships and overseas operations" that were used to hide the income of the super-rich from the tax-collector.

A decade later, the group's track record is dismal. IRS privacy rules mean that little is known about how the group's audits were undertaken, defeated, and then gutted, but Propublica's Jesse Eisinger and Paul Kiel have pieced together a vivid picture from the fragmentary evidence, showing why the project was "dead on arrival."

The case-study for the group is billionaire Georg Schaeffler, whose own tax lawyers warned him that a transaction was likely to attract IRS scrutiny, and who was eventually served with a $1.2 billion tax/penalty bill by the Global High Wealth unit in 2012 -- and who, seven years later, only paid "tens of millions" according to Propublica's sources.

Propublica delves into the court records to show how "battalions of high-priced lawyers and accountants that often outnumber and outgun" the IRS's team were able to draw out the case for years and years -- even as the Global High Wealth unit's headcount was being cut and cut by successive administrations. The unit was supposed to have 242 investigators by 2012, but by 2014, it was only 96, and today, it's only 58. This is despite the potentially massive upsides for the general treasury: it's estimated that the richest Americans cheat on their taxes to the tune of $50 billion/year.

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https://boingboing.net/2019/04/06/dead-on-arrival.html