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Saturday, January 7, 2012

WTF: IRS comes up $385 billion short - audits 1 in 8 millionaires

You know when Uncle Sam comes up short its gone be a problem. But he's only checking up on 1 in 8 millionaires and the tax gap comes from 84 PERCENT of BUSINESSES, OWNERS etc. UNDERREPORTING. I wonder who owns the businesses. Oh, the millionaires.......ok makes sense then.

IRS audited 1 in 8 millionaires

The IRS has noted that compliance among taxpayers is highest when there is third-party reporting of income. So, the basic W2 working Joe who has money withheld automatically from his paycheck typically has a very high compliance rate.
"A net of only 1 percent of wage and salary income was misreported. But amounts subject to little or no information reporting had a 56 percent net misreporting rate," the IRS said in a statement Friday.
Given the more than 140 million returns filed a year, the 22,184 employees working in IRS enforcement can't hope to close the tax gap on their own, especially given the frequently changing tax laws.
Last year, for instance, the agency audited more than 62,000 corporate returns and roughly 1.6 million individual returns, including one in 8 millionaires, the highest enforcement rate for that income group since 2004.
The tax gap, especially in a time of $1 trillion annual deficits, is one reason many on Capitol Hill are calling for tax reform.
"An improved tax code that's simple and fair to all Americans will help close the tax gap, boost our economy and create jobs," Senate Finance Committee Chairman Max Baucus 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."
While it's easy to be disconcerted over the size of the tax gap, two things are of note: The voluntary compliance rate among U.S. taxpayers has been fairly steady over the years, and Americans are among the best in the world at paying what they owe the tax man.

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