The cross-divisional, coordinated effort will focus on high-income taxpayers that have not filed returns, and on high-income taxpayers that either control a private foundation or own a pass-through entity such as an S corporation or partnership. The effort is being spearheaded by the IRS’ Large Business and International (LB&I) division and it is expected to start sending letters and requests for information in the next few months.
The IRS plans to use sophisticated data analytics to identify potential cases, and over 1,000 private foundations have already been identified. One of the key issues they are looking into is self-dealing, where individuals engage in transactions with their own foundations. For more information on various acts of self-dealing by private foundations, click here.
Taxpayers that meet these criteria can sit back and play the audit lottery or they can be proactive and try to identify and to fix any areas of concern.