Some of the most IRS-audited taxpayers in 2014 came from the highest income bracket, Time.com’s Money has revealed. Businessman and philanthropist Sam Wyly may have been one of them as the IRS recently assessed Wyly and his deceased brother Charles a total of $2.03 billion in back taxes, penalties and interest.
Wyly is a businessman who slowly built his fortune through a series of successful business ventures, the most lucrative being Sterling Software which he sold for $4 billion in 2000. Sam Wyly is a noted philanthropist, having donated more than $50 million to various charities over the years.
Basis of IRS Assessment
According to the IRS, Wyly, together with his brother Charles who died in an accident in 2011, hid income earned from sales of shares of stock in publicly traded companies in offshore trusts in the Isle of Mann.
The assessment came after the SEC concluded its 10-year long investigation of the Wyly brothers, allegedly for fraud involving the same offshore trusts. The IRS claims that the trusts hid the Wyly’s ownership and gains from the sale of stock which were never declared in the brothers’ tax returns.
SEC Fraud Investigation
The decade-long SEC investigation led to a civil jury finding that the Wyly brothers are liable for fraud, and imposed fines of $198 million against Sam Wyly and $101 million against the estate of Charles Wyly. In response, Sam Wyly filed for Chapter 11 bankruptcy citing the huge litigation costs arising from the SEC investigation that lasted 10 years. The IRS followed with an assessment of $2 billion.
Sam Wyly claims that the IRS assessment is ‘baloney’ and absurd. He said that he paid $160 million in taxes in the last 22 years while his brother Charles paid around $80 million in taxes. He maintains that he and his brother do not owe the IRS for the assessed back taxes and penalties.
The rich and famous in the US are not the only ones susceptible to IRS assessments. Smaller businesses and individuals who do not report any income, report operating losses, and file international returns also trigger red flags to IRS examiners.
Being the subject of an audit can be stressful. Many taxpayers often feel powerless to contest the IRS findings and end up paying huge amounts in further taxes and penalties.
If you have received a letter from the IRS about your tax returns, you may already be the subject of an audit – consult a tax lawyer immediately! Most tax regulations provide strict time periods for contesting and paying IRS tax assessments.
In Tyler and the East Texas area, the Scammahorn Law Firm has over 16 years of tax litigation experience, helping clients resolve IRS tax cases whether by reducing tax liabilities, or settling liabilities through offers in compromise, instalment agreements, and partial pay instalment agreements.
We welcome your call to us today at (903) 595-1000 to schedule a consultation with tax lawyer Scott Scammahorn.