IRS Drastically Increases Its Audits Of America’s Richest Taxpayers

In 2009, the Internal Revenue Service announced plans to unleash a new enforcement unit called the Global High Wealth Industry, the goal being to better investigate the complex finances of America’s wealthiest taxpayers.

They weren’t kidding.

Recently released IRS statistics indicate that the federal government increased their audits of America’s richest taxpayers — those with incomes above $10 million — by 75 percent last year. Nearly one in five — 18.5 percent — of America’s richest households dealt with an audit. In 2009, the Global High Wealth Industry’s first year of operation, the IRS audited only one in ten of America’s richest taxpayers.

Complex tax evasion has become an increasing problem in recent years, with popular strategies including conversion of income into capital gains and stashing cash in Swiss banks.

Audit rates also increased among some lower income brackets, but none so much. The second highest audit increase was among the second highest income bracket: those reporting incomes of $5M-$10M. They saw a 55 percent increase in their audit rate, totaling 11.6 percent. High, but much smaller than the increase experienced by the $10M-plus bracket.

Audits rate for those with incomes between $1-$75K remained largely the same.

Overall, the IRS increased the percentage of audits by about 11 percent from the year prior. That means 1.58 million tax returns — about 1.11 percent of all returns filed — were audited, costing the IRS about 53 cents per $100 collected — a 3 cent increase from 2009.

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fluidideas@gmail.com

fluidideas@gmail.com

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