Higher Income Audits Increasing

 The IRS plans to increase the number of audits of millionaire this year. Last year it audited one out of every 8 millionaires, making it the third year in a row of increased enforcement. During 2011, 12.5% of all taxpayers earning one million dollars or more were audited, making it the highest enforcement rate since 2004.

One of the reasons why the IRS has been increasing its audits rate is because it has been cracking down on offshore evaders (most who are high-income taxpayers) over the past few years. However, the agency is offering evaders a reduction in penalties and no jail time for a limited time if they  admit to having offshore accounts.

Besides millionaires, taxpayers making over $200,000 are also facing a higher risk of being audited than last year. In 2011 one in 25 of the people in this tax bracket were audited, compared to one in 32 in 2010. Conversely, the odds of being audited for taxpayers making less than $200,000 are significantly less, as only one in 98 were audited last year.