New reports show the number of audits on the country’s most wealthy individuals has steadily decreased.
What We Know:
- The nation’s wealthiest are paying taxes at all-time low rates as the number of audits has decreased. The data compiled by Syracuse University shows billions of tax dollars are left uncollected at a time when more money is needed to boost the struggling economy.
- According to Newsweek, of those making more than $1 million, 98% did not face an audit last year. In addition, over the previous eight years, there was a 72% drop in audits of those making more than $1 million, with a 55% drop in audits of large corporations. A report from the U.S. Treasury even states that “High-income taxpayers are generally not a collection priority,” with no strategy in place to deal with tax evaders.
- However, the report also states that high-income earners prevent a number of factors that prevent the IRS from resolving those cases efficiently. They are often corporations or partnerships located in major cities where experienced officers are understaffed to handle the number of cases. As a result, cases take longer to resolve, and many are abandoned entirely.
- Between 2010 and 2018, the IRS budget was cut by 20%. If the agency dedicated more time and resources to high-income audits, it could recover millions of dollars to help with its problems. The researchers stated, “At a time when Americans face growing economic inequality and financial hardship caused by the COVID-19 pandemic, the IRS is letting billions of dollars in tax revenue slip through its fingers.”
- Democrats have long lobbied for higher taxes on the wealthy. Higher taxes on the rich will bring millions of dollars into the economy that can be used to improve infrastructure and services. In March, Senators Elizabeth Warren and Bernie Sanders proposed a bill that would put a wealth tax of 2% on those with $50 million of wealth.
The IRS will be under close watch with the country firmly in tax season while millions expect a third stimulus check. Meanwhile, the IRS has pushed the date to file taxes this year back to May 17.
