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Gov’t Accountability Report: The IRS Should Probably Target the Wealthy More Often with Audits

Jan. 9, 2013 12:46pm

[Editor’s note: The following is a cross post by Robert Frank that originally appeared on CNBC.com]:

The IRS already audits the wealthy at a relatively high rate.

People who earn more than $1 million a year are more than 12 times more likely to be audited than people who earn $200,000 or less. About one of every eight tax filers making $1 million or more were audited in 2011 – double the rate of 2009.

But a new report says the IRS should be targeting the wealthy even more.

A report from the non-partisan Government Accounting Office says that the IRS could get more bang for its audit buck by targeting high earners.

It said that the net tax gap — the difference between taxes owed and taxes paid on time — was about $385 billion in 2006 (the period measured). It said this gap could be lowered by at least $1 billion by spending $124 million more on audits of high earners.

That may sound like a big expense. But it’s less than 8 percent of the $1.6 billion the IRS spent on examinations over two years.

Pure math, of course, favors targeting those with higher incomes. The GAO said that audits of filers with incomes over $1 million generated $47.20 for every dollar they cost the IRS – even though those exams are more complicated. Examinations of lower-income earners’ returns generated between $5.40 to $7.40 for every dollar.

“The results of our analyses suggest that there is potential for IRS to increase the direct revenue yield of selected enforcement programs by hundreds of millions of dollars per year without significant (if any) adverse effect on the indirect effect that examinations have on revenues,” the report said.

In short, it said the IRS be like Willie Sutton and go where the money is.

The IRS, which has already set up a special audit team to target the wealthy, may or may not act on the GAO recommendation. In a letter, James R. White, the IRS director of Tax Issues, said that the “IRS is committed to the optimal allocation of our enforcement resources; that is why we select workload strategically.”

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©2013 CNBC LLC., Robert Frank. Featured image courtesy Getty Images.

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Comments (32)

  • apojoe69
    Posted on January 10, 2013 at 9:52am

    It is clear and simple that few audits would ever be needed if we eliminated the federal income tax and established a fairtax.

    Report this comment

    apojoe69  
  • Ragnars Repos
    Posted on January 10, 2013 at 2:20am

    “People who earn more than $1 million a year are more than 12 times more likely to be audited…”

    Thieves go where the fancy s*** is.

    Report this comment

    Ragnars Repos  
  • Tom70
    Posted on January 10, 2013 at 12:47am

    Hmmm wonder why he didn’t tax the asset wealthy just the poor guys who’s wages make them comfortable. Hubby and wife working $225k your screwed.

    Report this comment

    Tom70  
  • TheBurningTruth
    Posted on January 9, 2013 at 9:37pm

    Of all the people I know, it’s the LOW income people that are the biggest cheats. They usually use cheap excuses such as:
    1) I’m just a little guy
    2) It isn’t much money
    3) I need it more

    They know that the IRS won’t go after them for two reasons:
    a) There isn’t much money to be collected from any one individual
    b) It would be politically incorrect to force a low income person to pay their “fair share”.

    There isn’t anything “fair” about the tax code, it’s all about confiscating wealth from wealth creators for redistribution.

    Report this comment

    TheBurningTruth  
  • 912always
    Posted on January 9, 2013 at 6:39pm

    Seems to me they ought to audit everyone employed by government and make them pay all their back taxes, especially the heads of agencies, congress, senate, etc., but then we all know that will never happen. The posturing is only for the weak minded’s benefit.

    Report this comment

    912always  
  • SamIamTwo
    Posted on January 9, 2013 at 6:13pm

    The less you make, the easier it is to keep accurate records….so they go after the fat cats…high risk…bang for the buck. Gee who would have thunked it…LMAO

    Report this comment

    SamIamTwo  
  • watashbuddyfriend
    Posted on January 9, 2013 at 4:26pm

    Ok, Senate, and House members, time to get the IRS out of bookkeeping, and change the Policy to concentrate on GROSS INCOME! Follow the BIG money into the Zwiss bank accounts, Cayman Islands, and other places where money is hidden!

    Report this comment

    watashbuddyfriend  
  • media-bias-steals-elections
    Posted on January 9, 2013 at 4:06pm

    I would like to see the business community make it easier for us not to depend on government.

    Shoppers (customers) are never audited for paying sales tax because they are paid at the cash register, which is an example of the flat tax.

    Report this comment

    media-bias-steals-elections  
  • matt708
    Posted on January 9, 2013 at 2:59pm

    they can’t even revoke the 501c of Media Matters

    Report this comment

    matt708  
  • jessieH
    Posted on January 9, 2013 at 2:30pm

    No, unless they target Congress & everyone else, in public service.

    Report this comment

    jessieH  
    • VoiceoftheMajority
      Posted on January 9, 2013 at 3:20pm

      You mean like cops, firefighters and parametics ? Get your head out of the sand. It’s people like you that corroded the moral fabric of this society.

      Report this comment

      VoiceoftheMajority  
  • love the kids
    Posted on January 9, 2013 at 1:42pm

    He just thinks that people that make a little more should be audited a little more. Remember, if they didn’t pay all their taxes, they didn”t do that, someone else did.

    Report this comment

    love the kids  
    • 13th Imam
      Posted on January 9, 2013 at 2:02pm

      Everyone should have to pay Federal Income Tax on ALL income from dollar Zero. Then everyone would have some skin in the game. You 47%’ers would squeal like stuck pigs, if you had to contribute Anything, by force.

      Report this comment

      13th Imam  
  • OKNative
    Posted on January 9, 2013 at 1:31pm

    If this is true, the IRS audits should immediately start with Michael Moore and Jeff Immelt!

    Report this comment

    OKNative  
  • tymtoact
    Posted on January 9, 2013 at 1:17pm

    REPARATIONS. OBama has a thorn in his ass about white people working and being successful.

    What about the $1000 a week WELFARE squatters adding some skin in the game. This tax thing is a joke. Trial lawyers take dividend salarys, pay no taxes because they buy NOTHING. Their law firm owns nothing and pays for everything they do from dusk to dawn.

    Want a trip to the islands, free, get a job in a trial lawyers office. Have a free ride, 1 minute meeting and 3 days of fun, ON THE FIRM.

    TAX TRIAL LAWYERS AND WE CAN REDUCE PAYROLL TAXES FOR EVERYONE TO ’0′

    Report this comment

    tymtoact  
    • BODYBAG
      Posted on January 9, 2013 at 1:35pm

      @TYMTOACT
      Posted on January 9, 2013 at 1:17pm
      REPARATIONS. OBama has a thorn in his ass about white people working and being successful.
      ———————————————————————————————-
      And most of them have fallen for the PC “tolerance” schtick hook, line & sinker and in the process
      have sold off our birthright.

      Look around. Notice that the ENTIRE country is turning into a ghetto? Guess where that comes from?
      Someone needs to really start being honest and fearless about reality.

      You can call me racist, bigoted or any other name but every city in the US has concentrated
      minority areas and they all look exactly the same— like a war zone —– like a bomb went off.
      Dirt instead of grass, no trees, dilapidated houses, trash everywhere, junk vehicles, high drugs & crime.

      Tell me I lie.

      Report this comment

      BODYBAG  
  • whatthecrazy
    Posted on January 9, 2013 at 1:14pm

    Who’s going to audit the IRS?

    Report this comment

    whatthecrazy  
  • engineerairborne
    Posted on January 9, 2013 at 1:08pm

    FLAT TAX save the audit money for the PEOPLE

    Report this comment

    engineerairborne  
    • spfoam1
      Posted on January 9, 2013 at 1:22pm

      Sales tax only, and get rid of 99% the IRS. The IRS spends a lot of money to simply exist, and they spend even more money trying to collect enough to pay the bills, so I see them as a major spending problem.

      Report this comment

      spfoam1  
  • 13th Imam
    Posted on January 9, 2013 at 1:03pm

    Thieves like Chuckie Rangold, and Johnny Corzine should be at the TOP of the list. And how about Tax Cheat Tim Geitner?

    Report this comment

    13th Imam  
  • barber2
    Posted on January 9, 2013 at 12:59pm

    “To target the wealthy.” Anyone else seriously bothered by this radical Left hate speech ?? The Chicago radicals now in control of the Democrat Party are sure a far cry from the JFK Democrats . Remember his ” ask not what your country can do for you , but what you can do for your country ?” These Obama Chicago radicals are a new breed. Yes. They have ” changed.” Just like they plan to “change” America. And that is not for the better. They are more like a political gang .

    Report this comment

    barber2  
    • 13th Imam
      Posted on January 9, 2013 at 1:09pm

      JFK couldn’t be a DEMOCRAT in good standing today. While his philandering would be a big enhancement to his resume, many of his fiscal views would discount him as a loyal Socailist DEMOCRAT in today’s American Communist D Party. And his family’s wealth, stolen from all the little people, would be glossed over, by the myopic DEMOCRAT sheeple.

      Report this comment

      13th Imam  
  • jackact
    Posted on January 9, 2013 at 12:59pm

    Really?
    “We the People’s” accountability report;
    Repeal the 16th amendment, shut down the IRS and the Federal Reserve and replace our entire system with ‘The Fair Tax Act’.
    In addition, no federal income?…no voting in the POTUS election.
    It’s a start.
    If we really wish to be accountable.

    Report this comment

    jackact  
  • civilwarcometh
    Posted on January 9, 2013 at 12:59pm

    I have my own opinion on who and what should be a target but it wouldn’t get posted.

    Report this comment

    civilwarcometh  
    • BODYBAG
      Posted on January 9, 2013 at 1:22pm

      Yeah they’re real sensitive about that stuff. Mine get removed regularly.
      But hey they keep posting the stories about leftists and union thugs threatening the lives
      of conservatives.

      Im pretty fed up with being labeled every day of my life and it is LONG past time for
      something to be done about it.

      Report this comment

      BODYBAG  
  • IndyGuy
    Posted on January 9, 2013 at 12:57pm

    Here’s a thought…How’s about we go to a flat tax and eliminate the I.R.S. all together and nobody gets to cheat on their taxes….

    Report this comment

    IndyGuy  
    • oldguy49
      Posted on January 9, 2013 at 1:00pm

      also with FLAT TAX AND TERM LIMITS …………but if i read a report a few months ago correctly GOVERNMENT employees owe millions in back taxes……………..start there

      Report this comment

      oldguy49  
    • civilwarcometh
      Posted on January 9, 2013 at 1:14pm

      Term limit’s would be great but a flat tax not so much. You are still taxing my income. Let’s go back to pre-1913 and you got a deal. That’s the tax code we should have.

      Report this comment

      civilwarcometh  
  • ResistSocialism
    Posted on January 9, 2013 at 12:53pm

    I think the IRS should audit the federal government.

    Report this comment

    ResistSocialism  
  • banjarmon
    Posted on January 9, 2013 at 12:52pm

    Start with ALL the federal government officials starting with the potus!!!

    Report this comment

    banjarmon  

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