Tuesday, March 28, 2006

Want to avoid an IRS audit? Be a millionaire!

The IRS continues to illegally withhold information that would allow its auditing procedures to be reviewed. But a just-released analysis by TRAC of new IRS data makes it clear that the agency continues to go after the poor while giving a free ride to the rich:
Syracuse, March 28 -- According to new data from the Internal Revenue Service only 30 of the nation's thousands of millionaires were subject to a face-to-face IRS audit in 2005. The very small number selected for the traditional and sometimes intensive audits were drawn from 184,054 individual tax returns reporting a total positive income of $1 million or more.
That's thirty out of more than 180,000 millionaires, or about one in 6000 (.016 percent). In comparison, the face-to-face audit rate for middle income taxpayers (between $25,000 and $200,000) is about one in 500 (.19 percent). So if you aren't rich, you're more than ten times more likely of being pulled in for a face-to-face audit than your average millionaire.

Even if you factor in "correspondence audits" in which the IRS sends you questions in the mail, the rich (over $200,000 annual income) are much less likely to be audited. In fact, taxpayers who make less than $25,000 are approximately twice as likely to be audited than those who make more than $200,000 a year.

So the best way to avoid getting called in by the IRS is clearly to be a millionaire. And if you're a business, having over a million dollars in assets is still the best policy, as these richest companies have avoided the sharp increases in audit rates that smaller companies have endured:
According to the IRS, corporate audits were up by a whopping 69 percent. However, the audits for companies with assets of $250,000 or less increased by 246% over the year before, those with assets of $250,000 to a million increased by 155% while those with assets of $1 million or more increased 18%.
To get the fullest picture, you should read the full report. What's clear though is:
  1. The IRS is going easier on rich individuals and corporations

  2. It's pumping its numbers by counting letters as audits, while it continues to cut auditing staff, and

  3. It's illegally hiding information to keep you from finding out the full extent of its shenanigans.
The so-called "conservative" legislators who want to "keep the government off the people's backs" are going to have a lot of explaining to their constituents if they continue to do nothing about this outrage.

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