According to a new article by the Los Angeles Times, the IRS is increasing the number of audits on taxpayers making over $1 million a year. In the article titled Big earners more likely to face audits by Tiffany Hsu, the majority of audits done by the IRS are done on those making $1 million and very rarely on anyone making under $20 k a year. Hsu states that in 2011 12.5% of taxpayers making over $1 million dollars were audited compared to 8% in 2010. Only 1% of taxpayers making under $200,000 were audited in 2010.
Much of this increase can be attributed to the U.S. government’s current economic state and the pressure of a huge budget deficit. To concentrate its efforts on the more complex tax returns and higher rates of income is more efficient for the IRS because it yields a higher collection rate. Essentially, it is where the money is.
In addition to the increase efforts of IRS tax collection and tax audits on big money makers, President Obama has proposed the “millionaire’s tax” for individuals making over $200,000 a year. The millionaires tax is a tax rate as high as people making less than $200,000 year and is also known as the “Buffett Rule” after billionaire Warren Buffett.
Needless to say, the current economic state has prompted society and government as a whole to reexamine our financial structures. As policies, laws and rules around our economy and taxes change, individuals will have to makes sure to stay up to date and educated to avoid any IRS tax problems.
Read more of Big earners more likely to face audits to learn more about the millionaire income bracket in the U.S. and around the world and how it is changing.
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