An announcement was released by the Biden administration about its plans to crack down on rich tax evaders. A $46 billion funding has been released to IRS to be utilized in digging out hidden money from ultra-wealthy individuals.
IRS Crack Down: Rich Tax Evaders to be Audited
With this at hand, the chances of a high-income earner being audited by the IRS remain vanishingly low. The Transactional Records Access Clearinghouse at Syracuse University released a report in 2022 containing information about a millionaire’s chance of coming face-to-face with an auditor fell to just 1.1%.
In a published post by CBS News, it was discovered that although IRS enforcement agents devote a quarter of their time to auditing millionaires, nearly 700,000 millionaires face “no scrutiny whatsoever”.
On the other hand, the IRS was somehow active with audits via mail. There are instances where the agency asks for additional information on certain items in a person’s tax return. TRAC found that about 85% of adults who are just under half of the millionaire audits were done via mail.
A Substantial Decrease in the Number of Millionaire Tax Returns
There has been a significant decrease in the number of millionaire tax returns. With the pace of enforcement slowing as the agency lost funding and personnel, the IRS annual audits have fallen from nearly 41,000 a decade ago to just 16,800 in 2022.
TRAC stated that severe budget cutbacks over the years meant that the IRS has examined fewer and fewer millionaire returns.
It was noteworthy that the number of millionaire audits rose modestly from 2020 to 2022, but this rate remained low because the number of high-income tax returns also grew during that time. IRS figures show that 703,000 tax returns were filed reporting an income of at least $1 million in 2022.