Who Gets Audited? Millionaires, Big Companies

Jan 6, 2012 12:58pm
gty tax payer jef 120106 wblog Who Gets Audited? Millionaires, Big Companies

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If as President Obama insists, millionaires aren’t paying their fair share of taxes, they are more than getting their fair share of audits, according to the IRS.

With the extended tax filing deadline only months away, the IRS said Thursday that taxpayers earning $200,000 or less a year have a smaller chance of an audit while those earning more than $1 million have a much greater chance according to data by the IRS released Thursday.

Only 1 percent of those earning under $200,000 have been audited in recent years. In contrast, 12 percent of millionaires were audited last year, up from 8 percent in 2010 and 6 percent in 2009.

Of those earning $200,000 and up, 4 percent were audited in 2011, up from around 3 percent in the last five years.

Steven Miller, deputy IRS commissioner for services and enforcement, told the Associated Press that the higher audit rates for the highest earners 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.”

That may be somewhat of a relief to taxpayers already worried about the economy and their personal finances. Last year, April 18 — the income tax deadline in 2011 — was the second most-stressful day for Americans that year, according to Gallup poll results released this week.  The most stressful day in 2011 was April 27, when one of the largest tornado outbreaks ever recorded ripped through the Southeast and caused a death toll of over 300 people.

The IRS audited nearly 1.6 million of 141 million individual returns in 2011, just over 1 percent of all filers. The rate has gradually increased. In 2001, 0.6 percent were audited, the AP reported.  Audits can be hassles that can take time and money.

But only about a quarter of audits involve face-to-face meetings with IRS officials. Most communication for audits is through letters. More than 8 in 10 individuals audited ended up paying additional taxes in 2010, the most recent year with available data.

Large corporations were audited more than smaller ones, the IRS’ data showed. In 2011, 1 percent of corporations with assets under $10 million were audited. Of corporations with assets of $250 million and higher, 28 percent were audited.

Read: 11 Tips to Avoid an Audit 

 

 

 

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