The United States government is really clamping down on taxes.
Not only is Washington revoking or rescinding passports held by Americans with unpaid taxes (SEE: U.S. government will revoke or rescind your passport if you don’t pay your taxes), the Internal Revenue Service (IRS) is being urged to target the wealthiest of Americans.
According to a new report by the Treasury Inspector General for Tax Administration, the IRS is being requested to focus its audits on taxpayers earning more than $600,000 per year rather than those Americans earning between $200,000 and $399,999. The reason for this is so the IRS can extract more revenues.
Moving forward, the Treasury inspector is suggesting the tax-collecting agency take another look at its income thresholds for strategies pertaining to high-income and high-wealth.
The report states that just $605 is collected in additional taxes each hour from those earning between $200,000 and $399,999. Meanwhile, more than $4,500 is taken each hour from those with incomes exceeding $5 million.
Ostensibly, audits were conducted on 1.5 percent (62,159) of the lowest high-income bracket and 12.1 percent (6,309) of the nation’s highest earners. The charts below will highlight this.
“Given the IRS’s goal of providing higher audit coverage to high-income taxpayers and its reduced operating budget, it is that much more important that the IRS selects audits that have the highest compliance impact,” the report says. “IRS management told us that decisions on resource allocation cannot be made solely on the basis of productivity measures alone. However, given the decreasing budgets that the IRS is working under, it is critical for the IRS to determine the best use of its limited resources.”
Because of budget cuts, the IRS has been forced to reduce the number of audits it conducts each year. Last year, the percentage of taxpayers audited reached a 10-year low as just 0.84 percent were audited.
Proof that we need to change our tax system. The first $50,000 exempt from Federal taxes , then very limited deductions. No need for audits. Also, the tax rates could be lower because more income would be subject to the tax.