Friday, January 18, 2008

IRS Boosts Tax Audits

The Internal Revenue Service said it has increased its enforcement efforts, auditing 84 percent more returns in fiscal year 2007 of individuals with incomes of $1 million or more compared to fiscal year 2006.

The number of those taxpayer audits jumped from 17,015 in fiscal year 2006 to 31,382 in fiscal year 2007, which ended Sept. 30. One out of 11 individuals with incomes of $1 million or more faced an audit in 2007.

The IRS has also been auditing more individuals with lower incomes. Audits of individuals with incomes over $200,000 climbed 29.2 percent to 113,105 taxpayers in fiscal year 2007 from 87,885 in 2006. The IRS conducted 13.7 percent more audits of individuals with incomes of $100,000 or less, auditing 293,188 returns in fiscal year 2007 compared to 257,851 in 2006.

The total number of individual returns audited increased 7 percent, reaching 1,384,563 in 2007 from 1,293,681 in 2006. The IRS filed 3.8 million levies and almost 700,000 liens during 2007, an increase from 2006.

Businesses, too, experienced more IRS audits, with the agency focusing on mid-market corporations with assets between $10 million and $50 million. Audits of S corporations were up 26 percent to 17,681 during 2007 from 13,984 in 2006. Audits of partnerships increased to 12,195 during 2007, 25 percent more than the prior year's total of 9,777.

Audits of businesses in general rose to 59,516 in 2007, an increase of almost 14 percent from the prior year's total of 52,223. While audits of large corporations dipped slightly in 2007 to 9,644, the number is up 14 percent from fiscal year 2002.

All those extra audits paid off for the IRS, with enforcement revenue reaching $59.2 billion, compared to $48.7 billion in 2006 and $34.1 billion in 2002.