IRS defends drop in audits of millionaires
The Internal Revenue Service is not living up to its pledge to crack
down on wealthy tax cheats, an IRS watchdog group says, citing a drop in
audits of millionaires last year.
The tax agency disputes the conclusion, ascribing the "slight"
decline in audits to its focus on getting people their economic stimulus
checks.
Those with incomes of $1 million and above had a 5.6 percent chance
of getting audited in fiscal year 2008, which ended last September, down
from 6.8 percent the previous year, according to IRS figures. The actual
number of millionaires audited fell from 23,200 to 21,874; the number of
millionaires filing tax returns grew from 339,138 to 392,776.
"In the face of growing federal deficits and public calls to lower
the tax gap - the amount of taxes due but not reported and paid - the
drop in millionaire audits is surprising," said the Syracuse
University-based Transactional Records Access Clearinghouse in a report
Monday.
It said the significant drop in audits of richer Americans contrasted
with IRS statements last year that it was making strong progress in
enforcement, especially of those with incomes of more than $1 million.
But IRS spokesman Terry Lemons said that what they regarded as a
"slight" drop in audits reflected a year in which the agency was dealing
with budget constraints and assuring that economic stimulus checks
reached mail boxes and bank accounts.
The audit rate for those earning less than $200,000 was largely
unchanged, at slightly less than one percent. For those with incomes of
more than $200,000, the rate inched up from 2.87 percent to 2.94
percent.
The bottom line, said Lemons, is that "if you are a millionaire you
are a lot more likely to be hearing from the IRS." He also pointed out
that a person with an income of more than $10 million now has almost a
one-in-10 chance of being audited.
The TRAC report said focus on high earner returns is critical because
of the huge rewards.
Among those millionaire audit cases where additional taxes were
recommended, the average was $198,000 after face-to-face audits and
$137,000 for audits done through correspondence.
WASHINGTON (AP)
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