One of Every Eight Millionaires Audited
Sometimes making less pays off
There’s an old saying that says the more money you make, the more problems you have.
And for those Americans making at least $1 million a year, those problems weren’t fun.
One of every eight Americans who called themselves millionaires in 2011 faced an IRS audit. Those making less than $200,000 had a much smaller chance of being audited: one out of 100.
Democrats in Congress have been unsuccessful in persuading Republicans to raise taxes on the rich. So the IRS’s auditing efforts have increased to bring more revenue into government coffers.
With twelve percent of millionaires audited in 2011, that was a jump from the eight percent audited in 2010. From 2004 to 2009 the percent was between five and seven. The IRS denies politics has anything to do with that, and cites tax fairness as the reason behind it.
Getting audited by the IRS is no fun. You’ll have to answer to the IRS, produce documents, and possibly pay more taxes. More than eight out of ten audited taxpayers paid more taxes in 2010.
There are many triggers the IRS uses to determine who to audit, and sometimes they are simply arbitrary, but having a tax debt stacks the odds for an audit against you, and one of the most potent forms of collections is a wage garnishment. In 2011 the agency garnished wages and seized money from bank accounts 3.7 million times, which helped them round up countless millions in back taxes.
If you’ve been on the receiving end of an unjust audit, make sure to hire a tax professional to help you obtain a favorable outcome. You might not be a millionaire, but that might be a good thing just this one time.