High-net-worth individuals be warned: the IRS is watching. And it’s not doing it return by return any longer; it’s looking at the big picture instead of one-offs, resulting in a rate of audits of the wealthy that nearly doubled in 2010. Detailed information about the rates of audits and their results was released Monday in the 2010 IRS Data Book.
The overall odds of any given taxpayer being audited by the IRS were one in a hundred in 2009, according to a Bloomberg report. But in 2010 that changed, with the overall rate edging higher to an overall rate of 1.11% of taxpayers being audited. But the high-net-worth? Those odds have increased, so that now anyone with an income above $10 million is looking at an audit chance of 18.4%, up from 10.6% in 2009.
How did that happen? Well, George Clarke, an attorney at Miller & Chevalier Chartered in Washington, offered an opinion in the report. He explained that as part of its investigation into offshore tax shelters and bank havens, as well as its voluntary disclosure program for wealthy taxpayers who were willing to ’fess up to having used such strategies, the IRS learned a lot about how the HNW approach asset management. “They learn things and then they roll those things out across the board,” he was quoted as saying.