The IRS has several programs in place, including the Offshore Voluntary Disclosure Program. Even those who intentionally hid their money overseas are allowed to confess to the IRS and correct their taxes for eight years.
And Chicago tax lawyer Robert E. McKenzie, who has defended rich folks claiming losses on everything from deer farms to race horses to yachts, says the Romneys -–despite the fact that Ann Romney’s statements on what dressage has done for her personally suggests lack of profit motive– likely did all the paperwork right and can assert they thought they’d make a profit, even if they never do. “The way I would argue it is `this horse competed in the Olympics and we’ll breed it and make money off the foal’,’’ says McKenzie. “When you’re that rich you can afford to have talented tax advisers.”
The Compliance Center computers are programmed to select those returns with high DIF scores which reflect issues that could be easily resolved by mail. The computers select those returns which are appropriate for correspondence audits and each respective return is reviewed by either a Tax examiner or clerk. The returns are DIF screened and quality reviewed using technically proficient examination personnel who are experienced in DIF screening operations. Returns which have apparent examination issues other than those appropriate for correspondence audit are referred to the local Area Office. Some examples of the kinds of items which can be verified by correspondence are itemized deductions, such as interest, taxes, contributions, medical expenses, and simple miscellaneous deductions such as union dues and small tools. Issues other than itemized deductions may be examined if they are single matters which would not be appropriate for office audit or field examination.