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IRS ups audits of millionaires

12% of taxpayers making $1 million or more were audited last year, up from 6% in 2009. Among those making less than $200,000, the audit rate stayed near 1%.

By MSN Money Partner Jan 6, 2012 1:13PM

This post is by Alan Fram of The Associated Press.

 

If you earn less than $200,000 a year, there's a strong chance you don't have to worry about an Internal Revenue Service audit. But if you make more than $1 million annually, the odds have been rising that you'll be hearing from the tax man.

 

New IRS figures show that 12% of millionaire earners were audited last year. That's up from 8% in 2010 and 6% in 2009.

 

The data shows that for those making under $200,000, the rate has stayed steady at around 1% in recent years.

 

IRS officials said the growing audit rate for high earners is aimed at demonstrating that the tax code is being enforced fairly and is unrelated to President Barack Obama's recent proposals to boost taxes on the rich. The White House and congressional Democrats are expected to continue taking similar populist stances with the approach of this November's presidential and congressional elections.

 

Steven Miller, deputy IRS commissioner for services and enforcement, said in an interview that the higher audit rates for the highest earning individuals are designed to "assure that those at the lower end of the spectrum know that those at the higher end of the spectrum are subject to the same rules and enforcement as everyone else."

 

"We base our audit decisions on tax issues, nothing else," said IRS spokeswoman Michelle Eldridge. "We don't play politics here."

 

Four percent of individuals earning $200,000 and up were audited in 2011, up from around 3% the previous five years.

 

The IRS provided data for only three categories of individuals' income: those earning under $200,000 annually, those making $200,000 and up and those earning $1 million and up.

 

Overall, the agency says, it audited nearly 1.6 million of 141 million individual returns in 2011, or just over 1%. That rate has been growing gradually and is almost double the 0.6% audited in 2001, the IRS said.

 

Only about a quarter of IRS audits involve dreaded meetings between taxpayers and agency officials. The rest are carried out using letters.

 

In 2010 -- the most recent year available -- more than 80% of those audited ended up paying additional taxes.

 

Altogether, IRS enforcement efforts -- including audits, legal action and other tactics -- resulted in an extra $55 billion being collected. That's down almost $3 billion from 2010, which Miller blamed on a falloff in estate taxes and corporations writing off their losses.

 

That $55 billion was a small part of the $2.3 trillion the agency collected in revenue last year.

 

The IRS also audited a greater proportion of large corporations than smaller ones, the data shows.

 

Last year, 1% of corporations with assets under $10 million were audited. Among corporations with assets of $250 million and up, 28% were audited.

 

The IRS figures also showed that:

  • In 2011, the agency garnisheed wages or seized money from bank accounts 3.7 million times, put liens on property 1 million times and seized 776 pieces of property.
  • 77% of individual returns were filed electronically last year, up from 69% in 2010.
  • 70% of callers to IRS taxpayer information telephone lines got through, slightly less than the 74% who reached someone in 2010. Miller attributed that to budget cuts to the agency.
  • The information IRS officials dispensed over the phone to taxpayers was accurate 93% of the time, the same as the previous year.
  • The IRS website was visited 319 million times in 2011, a slight increase.

The data was presented by federal fiscal years, which begin on the previous Oct. 1.

 

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

 

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85Comments
Jan 6, 2012 3:19PM
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Hope they don't discriminate. Go after Hollywood types too.
Jan 6, 2012 3:27PM
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Gee, if it is only the rich that cheat on their taxes, then why did the IRS start requiring receipts for church donations, cash donations to the Salvation Army Bucket at Christmas, donations of clothes, cars etc to charities?  The rich do not use these things to skirt taxes.....it was the so called "middle class".  Cheating on taxes is not an effort reserved for the "rich".  It crosses all of the socio-economic classes. 

 

Everyone who pays taxes attempts to pay as little as possible. I laugh when my liberal brother who feels everyone should pay more tax works so hard to minimize his tax burden, or another I know who lied about the income she received working overseas.  A "classic liberal", but thought she should not have to pay taxes.  This is the problem with virtually all Americans. 

They think all should be be taxed to death, just not themselves.

Jan 6, 2012 3:41PM
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if they are going to start auditing the "rich people" more....may I suggest they start with all those wealthy people we have running our government.  Start with our President and the IRS can work their way down from there.  
Smile

Jan 6, 2012 3:53PM
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A couple of years ago I was audited about my write off of sales tax. It was a huge amount around $25,000 and that alone probably red flagged my return. It was because I had just built a new house. I mailed them copies of all the invoices that I had paid and after getting a confirmation from the postal service that the package was delivered I waited a couple of weeks and called them. Of course they said they did not receive them and the IRS' mail room probably lost them.  After dealing with them over the phone for about 9 months without success, I was finally able to reach someone who requested that I fax the largest invoices to them which I did.  When I called them back, they said the invoices were denied because they were not "stamped" paid in full.  Being totally frustrated by that point in time, I requested a court date with a tax court for small claims. The amount they said I still owed was around $1800.00. I received my court date but about a week later I received a call from an arbitrator who asked me to send her a copy of 6 invoices with copies of cancelled checks which I did. About a week later I received a call from her saying that the case has been dropped and I owed nothing. The problem with dealing with the IRS, is that you can never talk to the same person twice let alone the same office in the country. I didn't want to go to a tax pro to help with this matter because I had all documentation to back up my claim.  I was hoping I could have gone to court to show the judge all the proof just to give the IRS a black eye in court. The moral to this story is to keep good records and don't be intimidated. 
Jan 6, 2012 3:15PM
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Tax everyone with an established FLAT tax.  That way the liberal maggots will know up front how much US taxpayer money they can squander....errr use for noble programs like, free needles, free condoms, free STD tests, free tuition to felons, free handouts to those who habitually abuse the welfare system... you get the picture.Smile
Jan 6, 2012 3:45PM
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Good idea,   I have the best idea every,   Audit the US CONGRESS and the PRESIDENT and all, Staff members of these people FIRST.  And every year.     The US CONGRESS and PRESIDENT are the 1%.  
Jan 6, 2012 3:38PM
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The real problem is government spends too much, way too much. You can tax people 100% of their earnings and the government will still print, borrow, and spend 150%. I am not anti-government, but the government is so out of control in its spending that I do not think we will last much longer without financial disaster at best and collapse at the worst.

 

For those of you that think government is the solution to everything I can only tell you that it is not. Government was meant to be limited in scope, and power, but now it has no bounds. Obama-care, if it is not rescinded will be the last nail in the coffin since the government will be then be able to tell you what to buy, make you buy it (probably from a government run entity), and tax you on the purchase of it as well. It is so far gone now I doubt we can change it because 47% (Communist Party types) pay NO TAXES and yet can vote that the 53% that do pay taxes must pay more. Talk about paying a "fair share" how about those that pay nothing be forced to pay something. And, yes, make the rich pay more as well, but if you think making the rich pay more will make government SPEND less you live in a fantasy world.

Jan 6, 2012 3:46PM
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I Just wonder how many CONGRESSPIGS have been audited each year?
Jan 6, 2012 4:47PM
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That's what really needs to happen. Audit all the SENATORS AND CONGRESSMEN. i BET THEY WILL FIND ALOT OF DISCREPENCIES!!!!!!!!!!!!!!!!!!!!!!!!!!!
Jan 6, 2012 3:52PM
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It is very apparent that the 47% that pay NO TAX are giving a thumbs down on anyone that posts anything about government be more responsible and accountable. I do not need the government to educate me, I can do that myself and did. I do not need government to FORCE me to buy anything, I can do that myself also. I do not actually need government for much other than a few valid things and am willing to be taxed for those services. But now government taxes those that work to "provide" those services to the 47% that PAY NOTHING and those who PAY NOTHING are still not satisfied. All those that PAY NOTHING will say is that the government does this and that, and that and this and we MUST have those services but then they hypocritically PAY NOTHING THEMSELVES for those services while DEMANDING others MUST!!!

 

No wonder this nation is going down the toilet fast.

Jan 6, 2012 4:42PM
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Maybe it stime to tax the freeloading illegals who are sucking up welfare, medical and housing dollars.  Pay up or go home! 
Jan 6, 2012 4:23PM
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ewent - you are apparently an idiot and willingly prove it with your posts. All you have to is do an Internet Search on the subject. But since you appear unable to actually put forth effort to educate yourself here is an article from the New York Times for you to read, if you can read and comprehend it. Located at

 

nytimes.com/2010/04/14/business/economy/​14leonhardt.html

 

And as I stated before....tax the rich....absolutely..​. but SPENDING by government that is OUT OF CONTROL is the real problem. You cannot keep SPENDING what you DO NOT HAVE by printing it, borrowing it and then kicking the DEBT onto the younger or next generation.

 

Jan 6, 2012 3:22PM
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Sure this have nothing to do with Obama.  I have worked in environments where the wealthy distribute their properties to avoid taxation.  When you are wealthy, you can afford to hire financial advisors and lawyers to learn how to screw the IRS over.  HOWEVER, if all departments of the government (i.e. IRS, Health and Human Services, Social Security, Workers' Compensation, Judicial, etc.)  would have a fraud division that would employ people and hopefully those employed people would do their jobs morally and legally to weed out fraud and put more money back into the tax payers' hands, which in turn would mean less taxation.
Jan 6, 2012 4:40PM
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The next step should force Congress to delete all the tax loopholes that allow the wealthy to scam the system.
Jan 6, 2012 3:35PM
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Steven Miller, deputy IRS commissioner for services and enforcement, said in an interview that the higher audit rates for the highest earning individuals are designed to "assure that those at the lower end of the spectrum know that those at the higher end of the spectrum are subject to the same rules and enforcement as everyone else."

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Yeah, sure.  Then why aren't they equally subject to audit? Of course, the IRS is discriminating. "Discriminating" was a poitive attribute until the political correctness crowd perverted it.

 

Discrimination is a no-brainer here. When you want to raise money, you go where the money is.  Unless there is outright fraud going on, they can't hope to net much from auditing those of modest means. 

Jan 6, 2012 4:39PM
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Some people are just plain jealous, covetous, and envious of others that have educated themselves, worked hard, taken risks and succeeded. Not everyone that even does these things will succeed. For all you Socialist, Communist, Marxist, Leninist types I want to tell you that you cannnot redistribute WEALTH, only money. You cannot redistribute a work ethic, a desire to overcome obstacles, a willingness and determination to keep on striving and be vigilant. You cannot redistribute character, morals, convictions and belief that makes you work to have a better life, period. And yes, it is up to those that do succeed to help those that do not, BUT it is to be the person's CHOICE TO GIVE and NOT the government's decision NOR YOURS to FORCE them to do so.

 

ewent - people like you are the real problem. You want what others have and hate them for having it, and so you want government to steal it from them so you can have it. ewent, it is people like you that are the real problem and not the "rich".

Jan 6, 2012 3:42PM
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Makes sense.  Throwing out politics, which tax return do you aduit, the single W2 wage slave making $30,000 a year, or the guy with investments, multiple income streams, and access to tax accountants?  It's just comon sense that the wealthy possess tax returns with more ability to have errors or fraud and more to lose through it.
Jan 6, 2012 4:50PM
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Once Congress deletes all the tax loopholes that benefit the wealthy, it can reduce the cost of running the IRS department and the growth of government employees who suck off the rest of us.
Jan 6, 2012 3:16PM
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We are from the gooberment and are here to help.  We used to be 99%ers but now we got these gooberment jobs with great benefits and a 40% higher pay than the private sector!  Oh, and we still do not have to work either.....
Jan 6, 2012 3:24PM
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Well, let's say instead of taxing the rich, we simply take all of the money made in a year by all of the billionaires and millionaires in this country and give it to the responsible fools in DC to apply towards the debt. (Which by the way they won't.) The amount collected with this 100% tax on the "rich" won't even pay the interest owed on the debt we currently have. Pointless to even think of the rich paying anymore than they do now. If we all simply stopped paying our taxes all at once and in concert, (we call this a tax revolt), the government could not possibly pursue anyone as they would shut down immediately for lack of funds. The IRS empolyees, without any paychecks would go home and stay there. The prisons would be shut down. The enforcement officials and workers would be so overwhelmed they would quit. Sound like a plan?
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