Saturday, January 07, 2012 7:32:40 AM
IRS: Americans Underpaid Taxes by $385B in 2006
Felipe Castro holds a sign advertising a tax preparation office for people that still need help completing their taxes before the Internal Revenue Service deadline in Miami.
Joe Raedle/Getty Images
By Steven Sloan - Jan 6, 2012 3:14 PM CT
The Internal Revenue Service estimates [ http://www.irs.gov/pub/newsroom/overview_tax_gap_2006.pdf ] that U.S. companies and individuals failed to pay $385 billion in taxes they owed in 2006, an increase from $290 billion five years earlier.
The agency said the rate of compliance remained almost unchanged at 85.5 percent, down slightly from 86.3 percent in 2001. The IRS announcement today is the first update to the so- called tax gap estimate in five years. The gap grew because the income base expanded between 2001 and 2006, the agency said.
The U.S. recorded a $248.2 billion budget deficit in 2006, according to the White House Office of Management and Budget. If the IRS had collected all of the taxes owed that year, the U.S. could have had a surplus of as much as $136.8 billion.
“This report shows that closing the tax gap needs to be a major focus of tax reform,” Senate Finance Committee Chairman Max Baucus, a Montana Democrat, said in a statement. “In an era when we’re squeezing the federal budget for every dollar of savings, we have to make every effort to recover these lost funds.”
The estimate is a comprehensive measure of the taxes the U.S. is owed and includes income taxes, the estate tax, employment and excise taxes.
Better Estimates
The IRS uses computer models to estimate the amount owed by individuals and businesses that don’t pay their taxes or don’t pay their full tax bill. The agency said it is getting better at estimating the tax gap in part because of better data on small corporations.
The biggest chunk of money that goes uncollected -- $235 billion -- comes from individuals, the IRS said. Of that, $122 billion is estimated to be taxes owed on business income that would be reported on an individual return.
The IRS estimated that $67 billion in corporate income tax wasn’t collected in 2006. Most of that -- $48 billion -- was from large corporations with more than $10 million in assets, the agency said.
The IRS said compliance is highest in sectors where information reporting or withholding are required. Business groups have successfully fought these types of regulations.
Rule Repeal
Congress repealed a rule in November that required governments to withhold 3 percent of payments to contractors. Lawmakers also scrapped a provision of the 2010 health-care law that sought to curb underreporting of income by compelling businesses to report more transactions to the IRS.
Meanwhile, the IRS is delaying a law that mandates overseas banks to withhold from some U.S. customers and a separate law requiring companies that process and settle credit-card transactions to report payment amounts to the U.S.
Lawmakers and regulators should be cautious in rolling back other reporting or withholding requirements, said Elizabeth Dold, a principal at Groom Law Group Chartered in Washington who led the IRS’s information-reporting advisory committee last year.
“Reporting and withholding are two very critical tools to close the tax gap,” she said. “They should be used carefully.”
To contact the reporter on this story: Steven Sloan in Washington at ssloan7@bloomberg.net
To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net
©2012 BLOOMBERG L.P.
http://www.bloomberg.com/news/2012-01-06/irs-says-u-s-tax-compliance-gap-reached-385-billion-in-2006.html [with comments]
===
Millionaires, the IRS has been auditing more of you
If you have a lot of these to fan around, you may be more likely to undergo an IRS audit, a new report indicates.
(Atta Kenare / AFP / Getty Images)
By Tiffany Hsu
January 6, 2012, 10:08 a.m.
Millionaires beware: The IRS is becoming more interested in you. If you’re pulling in less than $200,000, there’s not much to worry about.
The Internal Revenue Service said this week in an enforcement report [ http://www.irs.gov/pub/newsroom/fy_2011_enforcement_results_table.pdf ] that it audited 12.5% of wealthy taxpayers in fiscal 2011, up from 8% in 2010 and 6% in 2009. About 4% of those earning $200,000 and up were audited, up from 3% the year before.
But for the last five years, the agency has mostly left returns showing less than $200,000 in income alone, with around 1% facing audits.
Same goes for companies. Businesses with $250 million in assets have a 27.6% audit rate compared to 1% of firms with less than $10 million in assets.
Of 141 million individual returns filed last year – more than three-quarters submitted electronically -- there were 1.56 million audits total, according to the IRS. Of those, only about a quarter result in in-person visits from tax officials.
The IRS’s enforcement process led to taxpayers paying out an additional $55.2 billion last year. The agency also seized 776 pieces of property and used property liens 1 million times.
*
RELATED:
20% of Americans expect to be millionaires by 2020
http://latimesblogs.latimes.com/money_co/2011/09/20-of-americans-expect-to-be-millionaires-by-2020.html
*
Copyright © 2012, Los Angeles Times
http://www.latimes.com/business/money/la-fi-mo-irs-millionaire-audits-20120106,0,16218.story [with comments]
===
U.S. IRS Audited Record Millionaires in Fiscal ’11
1040A tax form booklets are stacked at the U.S. Postal Service.
Photographer: Jin Lee/Bloomberg
By Steven Sloan - Jan 5, 2012 2:28 PM CT
The U.S. Internal Revenue Service said it audited 12.48 percent of individual tax returns with income exceeding $1 million during fiscal 2011, a high reached at a time of debate over the taxation of top earners.
The announcement marks the third consecutive year that the IRS increased its audit rate on returns showing income of more than $1 million. According to IRS data, the previous record was the 8.36 percent of returns in that category audited during fiscal 2010.
“We’ve always tried to make sure there was equity in the system,” Steven Miller, deputy IRS commissioner for services and enforcement, said in a telephone interview today.
Miller said the higher rate of audits on top earners can be attributed to a greater focus on income held outside the U.S.
“We have done a lot of work in the offshore area,” Miller said.
The IRS released the data as protesters have occupied parks in dozens of U.S. cities over the past several months to highlight perceived income inequality. Democrats and Republicans in Congress have repeatedly clashed during the past year over the Democrats’ proposal to impose a surtax on annual income over $1 million.
The audit rate also climbed for corporations with more than $250 million in assets. The IRS said it audited 27.6 percent of these businesses, up from 25.3 percent in fiscal 2010.
$55.2 Billion
The IRS said it collected $55.2 billion from overall enforcement activities during fiscal 2011. That is down almost 4.2 percent from the $57.6 billion the agency collected from audits the previous year.
The audit rate for individuals in all income brackets remained constant at 1.11 percent in 2011 while the rate for small corporations -- those with assets less than $10 million -- rose to 1.02 percent from 0.94 percent in 2010.
Miller said the IRS will conduct audits this year with about 3,000 fewer enforcement personnel than in 2010. He said the reduced workforce wouldn’t diminish the agency’s tax collection efforts.
“We’ll be fine,” Miller said. “What we’re going to try to do is make sure we’re going to invest where we need to invest.”
To contact the reporter on this story: Steven Sloan in Washington at ssloan7@bloomberg.net
To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net
©2012 BLOOMBERG L.P.
http://www.bloomberg.com/news/2012-01-05/u-s-irs-audited-record-12-5-of-millionaires-in-fiscal-2011.html [with comments]
===
IRS contacts 1 in 8 millionaires seeking extra taxes, just 1 in 100 earning under $200K yearly
By Associated Press, Published: January 5, 2012
WASHINGTON — One in eight people earning at least $1 million annually was audited by the Internal Revenue Service last year, making them far likelier to be examined than those making below $200,000, according to IRS data released Thursday.
Just 1 in 100 individuals earning less than $200,000 had their income tax returns examined, the IRS said.
The 12 percent of millionaire earners audited in 2011 was appreciably higher than the 8 percent who were audited in 2010. IRS officials said the high ratio was part of an effort to demonstrate that tax laws are applied fairly.
“That has been something we’ve concentrated on to assure that there’s equity in the system, to assure that those at the lower end of the spectrum know that those at the higher end of the spectrum are subject to the same rules and enforcement as everyone else,” Steven Miller, deputy IRS commissioner for services and enforcement, said in an interview.
In recent weeks, President Barack Obama and congressional Democrats have sought to boost taxes on the wealthy as a way to pay for jobs programs, a theme they are expected to continue in this presidential and congressional election year. IRS spokeswoman Michelle Eldridge said the growing portion of millionaire earners’ returns audited is not related to politics.
“The IRS is an agency of civil servants, and we base our audit decisions on tax issues — nothing else. We don’t play politics here,” she said.
Between 2004 and 2009, the percentage of millionaire earners audited ranged between 5 percent and 7 percent.
The data was divided into only three categories of income: below $200,000, $200,000 and up, and $1 million and higher.
About 1 in 25 people earning $200,000 and more was audited in 2011.
The IRS also audited a greater proportion of large corporations than smaller ones, the data shows.
Last year, 1 percent of corporations with assets under $10 million were audited. Among corporations with assets of $250 million and up, 28 percent were audited.
The IRS said its enforcement efforts to collect all taxes owed — which include audits, court cases and other activities — netted $55 billion last year. That is nearly $3 billion less than the previous year, which Miller attributed to a falloff in estate taxes and corporations writing off their losses.
All together, the IRS audited nearly 1.6 million of the 141 million individual income tax returns that were filed. In 2010 — the most recent year available — more than 8 in 10 individuals audited ended up paying additional taxes.
The agency collected a total of $2.3 trillion in revenue last year from individuals and businesses, including the $55 billion from its enforcement efforts.
The IRS figures also showed that:
— In 2011, the agency garnisheed wages or seized money from bank accounts 3.7 million times, put liens on property 1 million times and seized 776 pieces of property.
— 77 percent of individual returns were filed electronically last year, up from 69 percent in 2010.
— 70 percent of callers to IRS taxpayer information telephone lines got through, slightly less than the 74 percent who reached someone in 2010. Miller attributed that to budget cuts to the agency.
— The information IRS officials dispensed over the phone to taxpayers was accurate 93 percent of the time, the same as the previous year.
— The IRS website, www.irs.gov, was visited 319 million times in 2011, a slight increase.
The data was presented by federal fiscal years, which begin on the previous Oct. 1.
Copyright 2012 The Associated Press
http://www.washingtonpost.com/business/economy/irs-contacts-1-in-8-millionaires-seeking-extra-taxes-just-1-in-100-earning-under-200k-yearly/2012/01/05/gIQAKBWGdP_story.html [with comments]
Felipe Castro holds a sign advertising a tax preparation office for people that still need help completing their taxes before the Internal Revenue Service deadline in Miami.
Joe Raedle/Getty Images
By Steven Sloan - Jan 6, 2012 3:14 PM CT
The Internal Revenue Service estimates [ http://www.irs.gov/pub/newsroom/overview_tax_gap_2006.pdf ] that U.S. companies and individuals failed to pay $385 billion in taxes they owed in 2006, an increase from $290 billion five years earlier.
The agency said the rate of compliance remained almost unchanged at 85.5 percent, down slightly from 86.3 percent in 2001. The IRS announcement today is the first update to the so- called tax gap estimate in five years. The gap grew because the income base expanded between 2001 and 2006, the agency said.
The U.S. recorded a $248.2 billion budget deficit in 2006, according to the White House Office of Management and Budget. If the IRS had collected all of the taxes owed that year, the U.S. could have had a surplus of as much as $136.8 billion.
“This report shows that closing the tax gap needs to be a major focus of tax reform,” Senate Finance Committee Chairman Max Baucus, a Montana Democrat, said in a statement. “In an era when we’re squeezing the federal budget for every dollar of savings, we have to make every effort to recover these lost funds.”
The estimate is a comprehensive measure of the taxes the U.S. is owed and includes income taxes, the estate tax, employment and excise taxes.
Better Estimates
The IRS uses computer models to estimate the amount owed by individuals and businesses that don’t pay their taxes or don’t pay their full tax bill. The agency said it is getting better at estimating the tax gap in part because of better data on small corporations.
The biggest chunk of money that goes uncollected -- $235 billion -- comes from individuals, the IRS said. Of that, $122 billion is estimated to be taxes owed on business income that would be reported on an individual return.
The IRS estimated that $67 billion in corporate income tax wasn’t collected in 2006. Most of that -- $48 billion -- was from large corporations with more than $10 million in assets, the agency said.
The IRS said compliance is highest in sectors where information reporting or withholding are required. Business groups have successfully fought these types of regulations.
Rule Repeal
Congress repealed a rule in November that required governments to withhold 3 percent of payments to contractors. Lawmakers also scrapped a provision of the 2010 health-care law that sought to curb underreporting of income by compelling businesses to report more transactions to the IRS.
Meanwhile, the IRS is delaying a law that mandates overseas banks to withhold from some U.S. customers and a separate law requiring companies that process and settle credit-card transactions to report payment amounts to the U.S.
Lawmakers and regulators should be cautious in rolling back other reporting or withholding requirements, said Elizabeth Dold, a principal at Groom Law Group Chartered in Washington who led the IRS’s information-reporting advisory committee last year.
“Reporting and withholding are two very critical tools to close the tax gap,” she said. “They should be used carefully.”
To contact the reporter on this story: Steven Sloan in Washington at ssloan7@bloomberg.net
To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net
©2012 BLOOMBERG L.P.
http://www.bloomberg.com/news/2012-01-06/irs-says-u-s-tax-compliance-gap-reached-385-billion-in-2006.html [with comments]
===
Millionaires, the IRS has been auditing more of you
If you have a lot of these to fan around, you may be more likely to undergo an IRS audit, a new report indicates.
(Atta Kenare / AFP / Getty Images)
By Tiffany Hsu
January 6, 2012, 10:08 a.m.
Millionaires beware: The IRS is becoming more interested in you. If you’re pulling in less than $200,000, there’s not much to worry about.
The Internal Revenue Service said this week in an enforcement report [ http://www.irs.gov/pub/newsroom/fy_2011_enforcement_results_table.pdf ] that it audited 12.5% of wealthy taxpayers in fiscal 2011, up from 8% in 2010 and 6% in 2009. About 4% of those earning $200,000 and up were audited, up from 3% the year before.
But for the last five years, the agency has mostly left returns showing less than $200,000 in income alone, with around 1% facing audits.
Same goes for companies. Businesses with $250 million in assets have a 27.6% audit rate compared to 1% of firms with less than $10 million in assets.
Of 141 million individual returns filed last year – more than three-quarters submitted electronically -- there were 1.56 million audits total, according to the IRS. Of those, only about a quarter result in in-person visits from tax officials.
The IRS’s enforcement process led to taxpayers paying out an additional $55.2 billion last year. The agency also seized 776 pieces of property and used property liens 1 million times.
*
RELATED:
20% of Americans expect to be millionaires by 2020
http://latimesblogs.latimes.com/money_co/2011/09/20-of-americans-expect-to-be-millionaires-by-2020.html
*
Copyright © 2012, Los Angeles Times
http://www.latimes.com/business/money/la-fi-mo-irs-millionaire-audits-20120106,0,16218.story [with comments]
===
U.S. IRS Audited Record Millionaires in Fiscal ’11
1040A tax form booklets are stacked at the U.S. Postal Service.
Photographer: Jin Lee/Bloomberg
By Steven Sloan - Jan 5, 2012 2:28 PM CT
The U.S. Internal Revenue Service said it audited 12.48 percent of individual tax returns with income exceeding $1 million during fiscal 2011, a high reached at a time of debate over the taxation of top earners.
The announcement marks the third consecutive year that the IRS increased its audit rate on returns showing income of more than $1 million. According to IRS data, the previous record was the 8.36 percent of returns in that category audited during fiscal 2010.
“We’ve always tried to make sure there was equity in the system,” Steven Miller, deputy IRS commissioner for services and enforcement, said in a telephone interview today.
Miller said the higher rate of audits on top earners can be attributed to a greater focus on income held outside the U.S.
“We have done a lot of work in the offshore area,” Miller said.
The IRS released the data as protesters have occupied parks in dozens of U.S. cities over the past several months to highlight perceived income inequality. Democrats and Republicans in Congress have repeatedly clashed during the past year over the Democrats’ proposal to impose a surtax on annual income over $1 million.
The audit rate also climbed for corporations with more than $250 million in assets. The IRS said it audited 27.6 percent of these businesses, up from 25.3 percent in fiscal 2010.
$55.2 Billion
The IRS said it collected $55.2 billion from overall enforcement activities during fiscal 2011. That is down almost 4.2 percent from the $57.6 billion the agency collected from audits the previous year.
The audit rate for individuals in all income brackets remained constant at 1.11 percent in 2011 while the rate for small corporations -- those with assets less than $10 million -- rose to 1.02 percent from 0.94 percent in 2010.
Miller said the IRS will conduct audits this year with about 3,000 fewer enforcement personnel than in 2010. He said the reduced workforce wouldn’t diminish the agency’s tax collection efforts.
“We’ll be fine,” Miller said. “What we’re going to try to do is make sure we’re going to invest where we need to invest.”
To contact the reporter on this story: Steven Sloan in Washington at ssloan7@bloomberg.net
To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net
©2012 BLOOMBERG L.P.
http://www.bloomberg.com/news/2012-01-05/u-s-irs-audited-record-12-5-of-millionaires-in-fiscal-2011.html [with comments]
===
IRS contacts 1 in 8 millionaires seeking extra taxes, just 1 in 100 earning under $200K yearly
By Associated Press, Published: January 5, 2012
WASHINGTON — One in eight people earning at least $1 million annually was audited by the Internal Revenue Service last year, making them far likelier to be examined than those making below $200,000, according to IRS data released Thursday.
Just 1 in 100 individuals earning less than $200,000 had their income tax returns examined, the IRS said.
The 12 percent of millionaire earners audited in 2011 was appreciably higher than the 8 percent who were audited in 2010. IRS officials said the high ratio was part of an effort to demonstrate that tax laws are applied fairly.
“That has been something we’ve concentrated on to assure that there’s equity in the system, to assure that those at the lower end of the spectrum know that those at the higher end of the spectrum are subject to the same rules and enforcement as everyone else,” Steven Miller, deputy IRS commissioner for services and enforcement, said in an interview.
In recent weeks, President Barack Obama and congressional Democrats have sought to boost taxes on the wealthy as a way to pay for jobs programs, a theme they are expected to continue in this presidential and congressional election year. IRS spokeswoman Michelle Eldridge said the growing portion of millionaire earners’ returns audited is not related to politics.
“The IRS is an agency of civil servants, and we base our audit decisions on tax issues — nothing else. We don’t play politics here,” she said.
Between 2004 and 2009, the percentage of millionaire earners audited ranged between 5 percent and 7 percent.
The data was divided into only three categories of income: below $200,000, $200,000 and up, and $1 million and higher.
About 1 in 25 people earning $200,000 and more was audited in 2011.
The IRS also audited a greater proportion of large corporations than smaller ones, the data shows.
Last year, 1 percent of corporations with assets under $10 million were audited. Among corporations with assets of $250 million and up, 28 percent were audited.
The IRS said its enforcement efforts to collect all taxes owed — which include audits, court cases and other activities — netted $55 billion last year. That is nearly $3 billion less than the previous year, which Miller attributed to a falloff in estate taxes and corporations writing off their losses.
All together, the IRS audited nearly 1.6 million of the 141 million individual income tax returns that were filed. In 2010 — the most recent year available — more than 8 in 10 individuals audited ended up paying additional taxes.
The agency collected a total of $2.3 trillion in revenue last year from individuals and businesses, including the $55 billion from its enforcement efforts.
The IRS figures also showed that:
— In 2011, the agency garnisheed wages or seized money from bank accounts 3.7 million times, put liens on property 1 million times and seized 776 pieces of property.
— 77 percent of individual returns were filed electronically last year, up from 69 percent in 2010.
— 70 percent of callers to IRS taxpayer information telephone lines got through, slightly less than the 74 percent who reached someone in 2010. Miller attributed that to budget cuts to the agency.
— The information IRS officials dispensed over the phone to taxpayers was accurate 93 percent of the time, the same as the previous year.
— The IRS website, www.irs.gov, was visited 319 million times in 2011, a slight increase.
The data was presented by federal fiscal years, which begin on the previous Oct. 1.
Copyright 2012 The Associated Press
http://www.washingtonpost.com/business/economy/irs-contacts-1-in-8-millionaires-seeking-extra-taxes-just-1-in-100-earning-under-200k-yearly/2012/01/05/gIQAKBWGdP_story.html [with comments]
Greensburg, KS - 5/4/07
"Eternal vigilance is the price of Liberty."
from John Philpot Curran, Speech
upon the Right of Election, 1790
F6
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