IRS researchers and academic economists have issued a paper concluding that wealthy taxpayers may been failing to report income at a rate higher that previously estimated. The paper mentions offshore strategies for tax avoidance (often talked about in the past) but then goes on to state that partnerships and similar entities are being used to avoid taxes.
As expected, the results have resulted in a call for more money from the IRS with the Commissioner stating that each dollar spent on tax enforcement could yield $5-$7 in additional tax revenue.
It is worth noting that one of the authors was an economist at a university who has previously written on and advocated for a wealth tax. Pressure to fund covid -19 related deficits is likely to remain on wealthy taxpayers. It is likely that new legislation coupled with aggressive enforcement will make carefully planning and good record keeping more important than ever.
