IRS upping audits on highest income bracket
The Internal Revenue Service, each year, releases an enforcement report. This report details the activities of the IRS division that audits returns and provides insight in to trends that may affect the next year.
The 2011 Enforcement Report
Recently released, the 2011 fiscal year IRS report details the enforcement actions the Internal Revenue Service took. In fiscal 2011, the IRS audited 12.5 percent of taxpayers with a reported income of $1 million or more. Businesses or corporations with assets of $10 million or more were audited 17.6 percent of the time. On the other end of the scale, 1 percent of taxpayers with $200,000 or less in income or businesses with less than $10 million in assets were audited.
The logistics of being audited
While being audited sounds like a scary event, the majority of audits do not result in a visit from a tax official; 75 percent of audits are completed without the auditor ever visiting the person or business being audited. With a total of 1.56 million audits in 2011, the IRS garnered an additional $55.2 billion in taxes. If you are selected for an audit, that just means that the IRS is going to be carefully combing through the tax return you have submitted and all supporting paperwork, looking for errors.
More audits for the well off?
One of the most interesting pieces of information buried in the Fiscal Year 2011 report is the statistics on the prevalence of audits. Between 2004 and 2009, individuals in the highest income group were audited between 5 and 6.5 percent of the time. In 2010, the same group was audited 8.4 percent of the time. The increase in audits is a response to lower tax receipts and part of an effort to focus enforcement activities on those individuals who are most likely to have the money to pay any tax liability.