The Internal Revenue Service (IRS) is sharpening its focus on America’s wealthiest taxpayers, signaling a wave of increased audits, particularly targeting large partnerships. In light of this, it’s prudent for those within the IRS’s scope to reassess their tax filings, especially over the last three years, the typical statute of limitations for IRS audits.
Scrutinizing Significant Transactions
Start with a thorough examination of major financial transactions to ensure you have robust substantiation for significant actions, such as the sale of assets, ensuring that all bases are covered and properly documented.
Readiness for Audit Response
Partnerships should start contemplating their strategy in case they are audited. This includes deciding whether to leverage in-house expertise or seek external professional assistance. Being proactive and reviewing significant transactions can pre-emptively address any documentation shortfalls.
Correcting Errors Ahead of Time
If during your examination you find any errors, correct these discrepancies. Proactive correction is typically viewed more favorably by the IRS than reactive adjustments post examination.
The Issue of IRS Agent Training
Past global high net worth audits were often exercises in futility. However, the IRS hopes the additional funding from the Inflation Reduction Act will mean better agent training, enabling them to adeptly handle complex tax returns and lead to hefty change letters.
We encourage you to take these insights seriously and begin preparing for the possibility of increased IRS scrutiny. Should you require assistance with reviewing past transactions, planning for an audit, or correcting previous filings, our team is ready to provide the expertise you need to navigate these challenges confidently.