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Androvett Blog

by Dave Moore at 5:21:06 pm

The tax man cometh, especially for the wealthy

U.S. residents who earned more than $1 million last year also earned another distinction: They received more unwanted attention from the IRS, says Bob Probasco, whose legal practice in the Dallas office of Thompson & Knight includes IRS audits and appeals and tax litigation. "There's an enforcement pendulum at the IRS," Probasco says. "For the past several years, the pendulum has been heading back to enforcement and it shows little sign of stopping anytime soon." Last year, the auditing pendulum swung heavily toward wealthier individuals, increasing 30 percent for those who earned more than $1 million, he says.

As Wall Street Journal MarketWatch reports:

The biggest jumps came at the top of the income ladder. About 18% of Americans earning at least $10 million were audited in fiscal 2010, up from 11% in fiscal 2009, according to the IRS. For those earning $500,000 to $1 million, the audit rate rose to 3.4% from 2.8%.

Also, according to Probasco, the federal tax agency is more closely scrutinizing offshore bank accounts, and is demanding more information for use in its audits.

While there’s nothing more certain than death and taxes, it seems that another growing certainty for wealthier Americans is governmental scrutiny on earnings.