Tags: Millionaires | tax | irs | Audit

Millionaires Nearly Twice as Likely to Be Audited

Monday, 26 March 2012 08:31 AM

The number of audits the Internal Revenue Service slapped on wealthy Americans nearly doubled in 2011 from 2010, CNN Money analysis of IRS data reveals.

Overall, 1.1 percent of taxpayers were hit with audits last year, about the same as in 2010.

However, taxpayers with income between $1 million and $5 million, the number jumped to 12 percent in 2011 from about 7 percent a year earlier.

Editor's Note:The IRS’ Worst Nightmare — How to Pay Zero Taxes

The IRS audited 21 percent of taxpayers with income between $5 million and $10 million in 2011, up from 12 percent the year before.

Thirty percent of those reporting income of $10 million or more were audited compared with 18 percent a year earlier.

The IRS was reportedly going after those stashing money offshore.
Politics could be playing a role as well, as GOP presidential hopeful Mitt Romney reportedly pays 15 percent in taxes since the bulk of his income comes from investments.

"There's so much controversy about Romney's low tax bracket and a lot more attention in the press about the millionaires being favored," says Timothy Gagnon, assistant academic specialist of Accounting at Northeastern University, CNN Money adds.

"It seems like the IRS is trying to show that it's paying more attention to millionaires and that their chance of an audit is higher than the average person."

Some experts have noted the increase, including Joe Perry, partner-in-charge of tax services at the accounting firm Marcum LLP in New York, especially due to an IRS task force targeting high net-worth taxpayers.

"Those are very time consuming and costly," says Perry, who represents several clients with incomes exceeding $10 million, according to Bloomberg.
"It’s worse than a root canal."

Editor's Note:The IRS’ Worst Nightmare — How to Pay Zero Taxes

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Monday, 26 March 2012 08:31 AM
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