The IRS Tried to Take on the Ultrawealthy. It Didn’t Go Well.

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vnatale
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The IRS Tried to Take on the Ultrawealthy. It Didn’t Go Well.

Post by vnatale » Fri Apr 16, 2021 7:52 pm

GUTTING THE IRS

The IRS Tried to Take on the Ultrawealthy. It Didn’t Go Well.

Ten years ago, the tax agency formed a special team to unravel the complex tax-lowering strategies of the nation’s wealthiest people. But with big money — and Congress — arrayed against the team, it never had a chance.

https://www.propublica.org/article/ultr ... ce=twitter


On June 30, 2016, an auto-parts magnate received the kind of news anyone would dread: The Internal Revenue Service had determined he had engaged in abusive tax maneuvers. He stood accused of masking about $5 billion in income. The IRS wanted over $1.2 billion in back taxes and penalties.

The magnate, Georg Schaeffler, was the billionaire scion of a family-owned German manufacturer and was quietly working as a corporate lawyer in Dallas. Schaeffler had extra reason to fear the IRS, it seemed. He wasn’t in the sights of just any division of the agency but the equivalent of its SEAL Team 6.

In 2009, the IRS had formed a crack team of specialists to unravel the tax dodges of the ultrawealthy. In an age of widening inequality, with a concentration of wealth not seen since the Gilded Age, the rich were evading taxes through ever more sophisticated maneuvers. The IRS commissioner aimed to stanch the country’s losses with what he proclaimed would be “a game-changing strategy.” In short order, Charles Rettig, then a high-powered tax lawyer and today President Donald Trump’s IRS commissioner, warned that the squad was conducting “the audits from hell.” If Trump were being audited, Rettig wrote during the presidential campaign, this is the elite team that would do it.


Georg Schaeffler faced a $1.2 billion tax bill after his company restructured a huge debt. (Julian Stratenschulte/picture alliance via Getty Images)
The wealth team embarked on a contentious audit of Schaeffler in 2012, eventually determining that he owed about $1.2 billion in unpaid taxes and penalties. But after seven years of grinding bureaucratic combat, the IRS abandoned its campaign. The agency informed Schaeffler’s lawyers it was willing to accept just tens of millions, according to a person familiar with the audit.

How did a case that consumed so many years of effort, with a team of its finest experts working on a signature mission, produce such a piddling result for the IRS? The Schaeffler case offers a rare window into just how challenging it is to take on the ultrawealthy. For starters, they can devote seemingly limitless resources to hiring the best legal and accounting talent. Such taxpayers tend not to steamroll tax laws; they employ complex, highly refined strategies that seek to stretch the tax code to their advantage. It can take years for IRS investigators just to understand a transaction and deem it to be a violation.

Once that happens, the IRS team has to contend with battalions of high-priced lawyers and accountants that often outnumber and outgun even the agency’s elite SWAT team. “We are nowhere near a circumstance where the IRS could launch the types of audits we need to tackle sophisticated taxpayers in a complicated world,” said Steven Rosenthal, who used to represent wealthy taxpayers and is now a senior fellow at the Tax Policy Center, a joint venture of the Urban Institute and Brookings Institution.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: The IRS Tried to Take on the Ultrawealthy. It Didn’t Go Well.

Post by boglerdude » Fri Apr 16, 2021 11:45 pm

Why dont all the libs go work for the IRS. Be the change you want to see
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Re: The IRS Tried to Take on the Ultrawealthy. It Didn’t Go Well.

Post by I Shrugged » Sat Apr 17, 2021 7:35 am

It's a very interesting article. I had no idea that if you had enough firepower you could run the IRS in circles that easily.

boglerdude, well that day is surely coming. Let's recall that the OBiden-Bama era IRS targeted conservative tax exempt groups. Lois Lerner lied to Congress about it and didn't suffer anything for doing so. I would be sure than using the IRS for their purposes is on the radar again.
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Re: The IRS Tried to Take on the Ultrawealthy. It Didn’t Go Well.

Post by vnatale » Sat Apr 17, 2021 12:06 pm

I Shrugged wrote:
Sat Apr 17, 2021 7:35 am

It's a very interesting article. I had no idea that if you had enough firepower you could run the IRS in circles that easily.

boglerdude, well that day is surely coming. Let's recall that the OBiden-Bama era IRS targeted conservative tax exempt groups. Lois Lerner lied to Congress about it and didn't suffer anything for doing so. I would be sure than using the IRS for their purposes is on the radar again.


This 2007 book is the definitive book regarding it...

Vinny

Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill)


https://www.amazon.com/Free-Lunch-How-t ... l_huc_item
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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