1. Home
  2. Taxes General Forum
  3. "millionaires" more subject to audit

"millionaires" more subject to audit

ok, you have heard it too. Those with incomes aver $1M (is that AGI? Taxable Income?) are more likely to be audited.

What does this mean?

Do these "audits" include CP letter correspondence?

Are they more subject to audit in large part because of their income level, or is it primarily because they are more likely to ring the typical IRS bells, such as:

Schedule C income, Contractors, Attorneys, large Schedule A deductions including large Charitable Deductions, large interest deductions, large tax deductions, more complex business transactions, larger Schedule D items, etc.

Not that I have a personal need, but maybe, just maybe, someday . . .

Reply to
Pico Rico
Loading thread data ...

Well, I don't really have any particular insight into the actual IRS reasoning, but perhaps they are using the Willie Sutton Rule? "That's where the money is?" :)

Reply to
taruss

There's an obvious efficiency argument: Which is a more cost-effective use of IRS resources: going after 10,000 people who each misstated their income by $100, 1,000 people who misstated their income by $1,000, or

100 people who cheated by $10,000. Assuming similar rates of cheating in each group, the latter gets them more bang for the buck. And that assumpton is probably wrong -- if you make less money, you have fewer loopholes you can use to try to hide it.

And this only really applies to the kind of audits that require human investigation. If you lie about figures that get reported to the IRS, such as W-2 income, the computers will detect the discrepancy, and you'll get an automatic letter.

Reply to
Barry Margolin

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.