The IRS has created a new enforcement unit that targets wealthy individuals with complex financial holdings, Forbes’ Michael Tonkavic writes in Is The IRS Coming to Audit You:
This increased focus is motivated by several factors. First, there is an enduring perception–whether accurate or not–that wealthy people, well-insulated by teams of professionals, get away with a lot when it comes to taxes. Add to that a dramatic need to increase revenue, coupled with tough economic times, which historically correlates with an increased IRS focus on enforcement, and it becomes reasonable to expect that this focus on wealthy individuals will be robust and long term.
The enforcement unit is called the Global High Wealth Industry (GHWI) group and it’s already had an impact:
But the impact of the IRS’ overall effort to audit high-net-worth or high-wealth individuals is clear: The likelihood of an audit for this group of individual taxpayers is on the rise. IRS statistics show that examinations of individuals with incomes of over $200,000 increased more than 24 percent from 2007 to 2008.
While the audit rate for all individuals is approximately 1%, the audit rate for individuals with income of over $1 million is now more than 5.5%. And, rather than segment audit candidates into two groups–those with either less or more than $1 million in annual income–the IRS now segments taxpayers into three income buckets: $100,000 to $200,000, $200,000 to $1 million, and $1 million or more. This enables examiners to be more selective and provides them with a deeper look into that filing population, which naturally leads to a greater emphasis on enforcement within it.
In recent months, the IRS hired approximately 4,000 additional people to increase audit activity.
Related Posts:
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- Obama Plans to Quadruple IRS Enforcment Funding in Next Five Years
- How the IRS Selects Returns for Audit
- White House Vows to Intensify IRS Collection Aggressiveness to Close $300 Billion Tax Gap
- Brace Yourselves Non-Filers and Delinquent Taxpayers: IRS to Target Non-Compliers
2 responses so far ↓
1 IRS Rarely Audits the Poor // Dec 23, 2009 at 12:08 am
[...] IRS Auditors to Target the Rich [...]
2 IRS Audits the Uber-Wealthy // Mar 13, 2010 at 9:15 am
[...] IRS Auditors to Target the Rich [...]
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