IRS Audited More Millionaires in 2011

I know you don’t want to think about filing your taxes already or possibly owing money.  You certainly don’t want to be subject to an audit.  If you don’t make at least one million dollars a year, you have a smaller chance of having this happen.

Individuals audited

The Internal Revenue Service (IRS) released data on audits of 2011 tax returns.  They audited one percent of individuals earning less than $200,000, four percent of those earning between $200,000 and $999,999 and 12.5 percent of those earning one million and more. In the previous tax year, 12 percent of millionaires were audited, which was a four percent increase.  In the period from 2004 to 2009 the proportion of millionaires audited ranged from five to seven percent. The Internal Revenue Service audited approximately 1.6 million of the 141 million individual tax returns filled for 2011; this is 1.1 percent of the tax returns overall.  In 2010, 80 percent of those audited paid additional taxes, there is no data on 2011 yet.  There was no breakdown by income group.

Businesses audited

The Internal Revenue Service audited more large corporations than small in 2011.  They audited one percent of the corporations with assets under $10 million, compared to 28 percent of those with assets of $20 million and above.

As a result of enforcing the tax law, $55 billion was collected in 2011 from individuals and businesses, which was $3 billion less than the previous year.  This was due mainly to the decrease in estate taxes and corporations writing off losses. There was no information broken down by individuals who filed versus corporations. Taxes collected from both businesses and individuals in 2011 totaled $2.3 trillion.

Obviously, the millionaires and larger corporations were audited more often. Is this fair?  It probably depends upon your income level and political beliefs.  The Internal Revenue Service claims the reason for targeting millionaires is not political.

Credit Expert Witness, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.

Categorised in: Financial, Internal Revenue Service, Money & Identity

This post was written by John Ulzheimer