Millionaire's Growing Problem: Tax Audit

Contributed by mm | March 5, 2007 5:01 AM PST

If you are receiving 7 figure income, your tax return is six times more likely to get audited. Still, it is probably a nice problem to have -- I wish I will have this level of annual income one day.

From MSBNC:

Your chances of being audited are pretty good if youâ€™re wealthy. Theyâ€™re not bad if youâ€™re not.

About 1 in 16 taxpayers with income of $1 million and higher was audited last year, a 33 percent increase from the previous year.

â€œIf youâ€™re earning that kind of money and we notice a problem, youâ€™re going to hear from us,â€ IRS Commissioner Mark W. Everson said in a statement on the agencyâ€™s enforcement figures for the 2006 fiscal year.

...

Audits of taxpayers with incomes above $100,000 were up 18 percent from 2005, the highest figure in more than a decade. Audits of certain businesses, especially â€œSâ€ corporations and partnerships, increased by 34 percent, though audits of larger corporations â€” with assets over $10 million â€” were down slightly.

Overall, audits of individual taxpayers were up by 6 percent in 2006; total individual returns audited were 1.3 million, for an average individual audit risk of about 1 in 100.

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Comments

>>> Nathaniel Commented on March 21, 2007

I think it is because the IRS is hard up for money. If you have lots of money it would be a good idea to keep very good records, because the burden of proof is on you when dealing with the IRS.

>>> Nathaniel Commented on March 21, 2007

I think it is because the IRS is hard up for money. If you have lots of money it would be a good idea to keep very good records, because the burden of proof is on you when dealing with the IRS.

>>> Nathaniel Commented on March 21, 2007

I think it is because the IRS is hard up for money. If you have lots of money it would be a good idea to keep very good records, because the burden of proof is on you when dealing with the IRS.

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