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UPDATE 2-IRS high-wealth unit to focus on business entities
October 26, 2009 / 9:38 PM / in 8 years

UPDATE 2-IRS high-wealth unit to focus on business entities

* IRS unit targets rich Americans and their businesses

* Months-old unit in early stages -- IRS commissioner

* Shulman: Unit poised to grow with new agents, experts (Adds further comments, context)

By Kim Dixon

WASHINGTON, Oct 26 (Reuters) - The U.S. Internal Revenue Service’s new global wealth unit will focus on taxpayers with assets worth tens of millions of dollars who are sheltering wealth through complex business entities, the IRS chief said on Monday.

The IRS unit, which started operations in recent months, is part of a broader effort at the agency to combat international tax evasion, and the unit will grow over time, IRS Commissioner Doug Shulman told a meeting of the American Institute of Certified Public Accountants.

“We will take a unified look at the entire web of business entities controlled by a high-wealth individual,” Shulman told the meeting. “At least initially, we will be looking at individuals with tens of millions of dollars of assets or income.”

The high-wealth unit will focus on trusts, real estate investments, privately held companies and other business entities controlled by rich individuals, Shulman said.

While use of sophisticated legal structures are at times legal, there are other instances where they “mask aggressive tax strategies,” he said.

Tax authorities in Japan, Germany and the UK have also created such divisions.

He said the agency is in the early stages of building the bureau.

An IRS spokesman could not quantify the projected growth in the division to which Shulman alluded.

The IRS is opening new offices in Beijing, Panama City and Sydney, to focus on funds flowing out of Europe and into Asia, in part because of a heightened focus on international enforcement in Europe, Shulman said.

At the center of the agency’s offshore effort has been its legal cases against Swiss banking giant UBS AG UBSN.VX, which has agreed to turn over nearly 5,000 names of individual American clients and paid $780 million to settle a criminal case for aiding tax evasion.

The commissioner sought to differentiate between the crackdown on rich individuals evading taxes and President Barack Obama’s budget proposals to change the rules that govern how multinational corporations are taxed on overseas profits.

Obama has proposed raising more than $200 billion by tightening international corporate tax rules.

On the corporate side, the agency is focusing on corporations who push “tax planning beyond acceptable bounds,” he said. (Reporting by Kim Dixon; Editing by Steve Orlofsky, Gary Hill)

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