It looks like the super-rich is not getting audited as much as they used to. The IRS released data showing the audit rate for people making at least $10 million a year was cut by less than a half. The audit rate for high earners fell to 6.66% for the 2018 fiscal year. The government’s fiscal year runs from October 1st through September 30th. The fiscal year ended before the enactment of the 2017 Tax Cuts and Jobs Act. In 2017, the audit rate was 14.52% for higher earners.
While the audit rate for high earners was cut more than in half, those earning more than $10 million in adjusted gross income (AGI), were still audited more than any other income group. Audit rates did drop for other income earners, those earning $5-$10 million had their rate dropped from 7.9% to 4.2%. For those earning $1-$5 million, their rate dropped to 2.2%. Audit rates from those earning $100,000 to $200,000 dropped less than one percent.
The data shows that the IRS audited almost 1 million tax returns in the 2018 fiscal year, which was about .5 percent of all returns that were filed. The IRS audited .6 percent of all individual income tax returns and audited .9 percent of all corporate income tax returns. The majority of the audits were performed via correspondence, with only 25.2% being conducted in the field. A correspondence audit is a type of audit the IRS performs via mail. The IRS will send a taxpayer a written request for additional information about a specific item or issue on their tax return. The taxpayer just needs to produce sufficient evidence to resolve the issue. A field audit is considered the most serious forms of audits and is when the IRS visits the taxpayer’s home, business or accountant’s office to gather information. The IRS also examined 15,562 tax-exempt organization, employee retirement plan, government entity, and related taxable returns.
If you find yourself or your business being audited by the IRS and need assistance, Polston Tax can help. Our team of tax attorneys are able to represent you against the IRS in almost any audit situation. If you need help, give us a call at 844-841-9857 or click below to schedule a free consultation.
