IRS Steps Up Audits On High Income Taxpayers

by Mike Godfrey, Tax-News.com, Washington

15 March 2004

Statistics released by the Internal Revenue Service last week have revealed a significant increase in the number of audits carried out on high income taxpayers in 2003.

According to the figures, the IRS carried out 139,379 audits on this group of taxpayers last year, representing a 24% increase. However, statistics from 2002 reveal that there were around 10.7 million Americans with incomes of more than $100,000, meaning that only around 1% of them received a call from the tax man last year.

Meanwhile, the audit rates for corporations with less than $10 million in assets fell in 2003 to 0.58% from 0.63%, down from a high of 2.22% in 1997. Similarly, corporations with assets of more than $10 million experienced fewer audits last year at 12.08%, down from 14.17% in 2002. The audit rate for these firms was 25.77% in 1995.

"We have arrested the decline in enforcement actions that began in the early 1990s and worsened after implementation of the IRS Reform Act of 1998," Everson announced at a press briefing. However, he conceded that audit rates remained “too low”.

"We are strengthening our enforcement efforts, but we will do so while respecting taxpayer rights," IRS Commissioner Mark Everson explained in a statement. "It's as simple as this. People should pay what they owe."

The government has asked Congress to make an additional $393 million available for the IRS budget, which is to be focused on expanding the enforcement department and boosting the number of audits carried out on both large and small firms

Recommended