Tuesday, March 15, 2011

IRS Audits 18.4% of the Richest Taxpayers

Last year, the Internal Revenue Service audited 18.4% of taxpayers with incomes exceeding $10 million. Audit rates went up across the board for 2010, except for those without any adjusted gross income.

Bloomberg reports:

    Audit rates increased in 2010 for all income groups, except for people with no adjusted gross income, according to data released today in Washington for the fiscal year that ended Sept. 30.

    Highest earners had the sharpest increases in audit rates. The IRS audited 11.6 percent of taxpayers reporting adjusted gross income between $5 million and $10 million, up from 7.5 percent the year before. Taxpayers making between $75,000 and $100,000 faced the least chance of an audit, with a 0.64 percent rate.

    Through its voluntary offshore disclosure programs and court cases involving Swiss banks, the IRS has gotten a better understanding of how wealthy people in non-corporate businesses manage their assets, said George Clarke, an attorney at Miller & Chevalier Chartered in Washington.

    “They learn things and then they roll those things out across the board,” he said.

    The overall audit rate for income tax returns was 1.11 percent, up from 1 percent the year before. The IRS had previously reported some of this data without the breakdowns at the top of the income scale.

    Concerted Effort

    The increase in audits of people making more than $10 million is part of a concerted IRS effort to focus on the business dealings of the wealthiest individuals.

Read more here

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