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IRS Increases Audits of Wealthy Taxpayers

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Washington, D.C. (March 28, 2011)

By Michael Cohn, Accounting Today

The Internal Revenue Service increased its audits of high-income taxpayers last year by as much as 75 percent.

The IRS released its 2010 IRS Data Book earlier this month, showing trends in agency activities for the fiscal year (see IRS Collected $2.3 Trillion in FY2010). The statistics showed that the IRS audited 18.4 percent of taxpayers whose incomes exceeded $10 million last year, compared to 10.6 percent in 2009, according to Bloomberg.com.

Those whose adjusted gross incomes ranged from $5 million and $10 million had the largest jump in audit rates, at 11.6 percent last year, a 55 percent increase, compared to 7.5 percent in 2009. Those who earned between $75,000 and $100,000 a year had only a 0.64 percent audit rate, giving them the best odds of avoiding an audit. Audit rates for those earning between $1,000 and $75,000 last year remained about the same as the prior year, according to the Huffington Post.

The overall increase in audits last year was about 11 percent. The IRS audited 1.58 million tax returns last year, or approximately 1.11 percent of all the tax returns it received. The audits cost the IRS 53 cents for every $100 it collected last year, up 3 cents from 2009. IRS criminal investigations also jumped 14.2 percent in 2010 compared to 2009.

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