Expect a ‘More Aggressive’ Compliance Landscape for Taxpayers – Steven Jager Interviewed by Accounting Today

As the world emerges from COVID and returns to a more normal environment, tax practitioners are facing an increase in compliance efforts and controversies not only in the U.S., but globally. In an interview with Accounting Today, Fineman West Partner, Steven L. Jager, discussed the IRS high-wealth initiative, which targets very wealthy individuals. “The Global High-Wealth Group, also known as the ‘Wealth Squad,’ seeks to identify high-net-worth individuals. Using various techniques, the IRS has more tools to obtain information and gets many of its leads from data scientists. The IRS has invested time and money to develop data analytic tools. They employ an army of data scientists who create algorithms to ferret out corroborating documentation,” he commented.

Steve further explained, “For example, when a taxpayer wants to increase their credit line, they fill out financial statements for the bank. Before data analytics, that information would stay in the bank files and require a lot of bad luck for the taxpayer if the application were to be discovered by the IRS and matched with the taxpayer’s tax returns. But now with algorithms they’re able to discover if a taxpayer filled out a loan application that indicates different income than what is being reported on their tax return. That’s a very powerful tool.”

He cautions clients to be reasonably close to what’s verifiable on their tax return if they’re filling out credit information and are asked for their income. “That’s the scary element of the Wealth Squad — they have access to all the information they weren’t able to use before. But their real power is through data analytics, which gives them the ability to unravel extremely complicated situations,” Steve added.

Read the full Accounting Today article here.