Wednesday, Nov. 11
Posted 2 p.m. EDT
In the administration's push to tax the wealthy to pay for proposed social services like health care, you get an idea of the kind of money at stake with the case of billionaire Julian Robertson.
The former Tiger Management hedge fund manager avoided paying $26,792,341 in New York City taxes when he successfully argued that he wasn't legally a resident in 2000. At issue were only four days that were unaccounted for in Robertson's residency.
In order to prove you are not a resident of New York City, you must live outside the city for half the year. In the leap year 2000, Robertson had to account for 366 days total. He could verify he spent 179 outside the city, and 183 inside. The city said if he couldn't prove those remaining four days were outside the city, they could consider them to be inside.
With that much cash on the table, you can bet the judge in the case scrutinized every receipt, phone call, and outing for those four days. Ultimately, the state Division of Tax Appeals determined that Robertson sufficiently proved he was outside the city, saving him a bundle. It pays to keep detailed tax records.
As for the rest of us, thank heaven for legal tax havens.
Increased tax scrutiny for the wealthy: In related news, the IRS is stepping up its enforcement on the the ultra-high-net-worth individuals. Truly, there are fewer places to hide your fortune these days. A new IRS unit called the Global High Wealth Industry group will begin auditing those with assets or income above $10 million starting next month.
This is all part of the increased compliance and monitoring of the financial services industry and the offshore tax evasion crackdown I mentioned previous posts. The wealthy often use complex structures in their estates, and the IRS plans to meet this challenge by staffing the unit with agents who are skilled in auditing sophisticated investments.
Calculate your average and marginal tax rates.
Learn more about managing finances in our 2009 Estate Planning Guide.
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