IRS Has High Income Earners In Its Sights

by Mike Godfrey, Tax-News.com, Washington

25 March 2003

The US Internal Revenue Service has been targeting more high income earners in a programme which netted $32.6 billion in unpaid taxes for the budget year that ended September 30 2002.

Strategic changes have been employed by the IRS in a bid to catch those who are more likely to try and evade taxes. The agency has used a blend of traditional audits and newer methods primarily focused on people earning over $100,000 per year. The number of audits undertaken on this group of earners rose by 22% last year. The scheme is also targeting people who attempt to hide income offshore, companies that actively employ tax evasion techniques, and those who never file a tax return.

Endorsing the IRS's policy, acting Commissioner Bob Wenzel confirmed that the Service was "committed to ensuring everyone pays a fair share, including those who have the resources to move money offshore or engage in abusive schemes or shelters."

The IRS has put much of its energy into clamping down on people who hold credit and debit cards with offshore banks in order to avoid US tax laws. However, US citizens voluntarily declaring their offshore banking details before April 15 this year will avoid any penalties or criminal proceedings.

Despite the success of the tax authority's new initiative, the IRS's overall collection statistics remain poor and appear to be getting worse. According to a reports, only 1 in 174 returns were audited last year, down slightly from the previous year. This compares with a rate of nearly 1 in 60 in 1996.

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