Ultra-wealthy may face more IRS scrutiny

Your richest cross-border clients could face increased IRS scrutiny.

The tax department is rethinking which taxpayers to spend the most time auditing.

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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.

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Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.