Your richest cross-border clients could face increased IRS scrutiny.
The tax department is rethinking which taxpayers to spend the most time auditing.
The Treasury Inspector found that while the IRS spends 50% of its time auditing people with incomes of US$200,000 to US$399,999, it would be more productive to focus on people making US$5 million and up.
For every hour the IRS spends auditing people with US$200,000 to US$399,999 in income, it discovers US$605 in taxes owed. In the US$5-million plus bracket, that amount is US$4,545.
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Forty percent of federal income taxes collected are paid by 1% of U.S. taxpayers, notes the IRS report.
Years of budget cuts have forced the IRS to scale back its audit operations. In 2010, 1.11% of all returns were audited, and in 2014, 0.86% of all returns were audited.
|Adjusted Gross Income||Audit Coverage (2014)|
|No Adjusted Gross Income||5.26%|
|$1 to $24,999||0.93%|
|$25,00 to $49,999||0.54%|
|$50,000 to $74,999||0.53%|
|$75,000 to $99,999||0.52%|
|$100,000 to $199,999||0.65%|
|$200,000 to $499,999||1.75%|
|$500,000 to $999,999||3.62%|
|$1 million to $4,999,999||6.21%|
|$5 million to $9,999,999||10.53%|
|$10 million or more||16.22%|