Those Housewives of New Jersey better brace themselves: the IRS has announced that it’s focusing its audits on wealthy individuals and corporations as part of a broader effort to crack down on international tax cheats.
IRS Commish Doug Shulman, a Bush appointee, has declared international compliance his “top priority.” He told the US House of Representatives, “Our long-term investment is to have a trend where wealthy individuals, large corporations, (those) who have really benefited from being in the United States, we’re going to make sure that they pay their taxes.”
Shulman’s comments came in response to a criticism by Representative Jose Serrano that reports indicate that the IRS audit rate for millionaires fell 19% between fiscal 2007 and 2008. That same report by Syracuse University claims that audits of corporations with more than $250 million in assets tumbled to 26% from 43% between 2005 and 2007.
Shulman has acknowledged that the percentage of audits for high wealth individuals has declined even as the number of audits has increased. The IRS audited about 5.6% of individuals making more than $1 million in fiscal year 2008, an 18% drop from the prior year. But, he noted, the average taxpayer still has a 1% chance of being audited compared with a 5.5% chance among millionaires.
Despite bickering about the size and reasons of the decrease, Shulman conceded that increased emphasis on compliance was necessary. Even as the feds continue to pound away at UBS and other banks that may be assisting with hiding assets for tax avoidance purposes, the IRS has announced that it is stepping up efforts to encourage compliance. The message from IRS to wealthy individuals who may be shielding assets is clear: show me the money.
