IRS Looks More Closely at Top Brackets
April 4, 2011 (United Press International) The Internal Revenue Service said it is increasing its audits of wealthier U.S. taxpayers.
For fiscal 2010, almost one out of five -- 18 percent -- of people earning $10 million or more were audited, up from about one in 10 -- or 11 percent -- from the previous year, the IRS said in a report.
Taxpayers earning between $500,000 and $1 million also were audited more frequently in fiscal 2010 compared with the previous year, The Wall Street Journal reported Monday.
The IRS said 3.4 percent of those earning between half a million dollars and $1 million were audited in fiscal 2010, compared with 2.8 percent in fiscal 2009.
A large majority of the audits -- about 70 percent -- are exchanges of letters asking for clarification of issues, such as charitable donations or how much a spouse claims to be part of a business. But audits of wealthier clients since 2009 have "at least doubled, if not tripled," said accountant David Lifson at Crowe Horwath LLP in New York City.
"They are touching a broader group of high-income taxpayers, asking about one or two issues at a time," Lifson said.
Move involved audits can cost upward of $10,000, said Andrew Mattson, a certified public accountant at Moler, Nixon & Williams, a California firm.
A tax lawyer in Fort Lauderdale, Fla., Martin Press, said the IRS used six agents and an attorney to pursue one case.
The IRS in 2009 formed the Global High Wealth Industry group, which has been dubbed the "wealth squad," the Journal reported.