Photo of Professionals at Bomar Law Firm

Guiding You Through The Legal Process

Photo of Professionals at Bomar Law Firm

Wealthier taxpayers may face more frequent audits

On Behalf of | Apr 24, 2019 | Tax Audits

Taxpayers in Georgia may fear an IRS audit as one of their worst nightmares. These detailed overviews of tax filings may leave even honest taxpayers worried. That’s why filers should be aware that the agency announced that it may be changing its methods to determine which returns to audit. In testimony before Congress, the IRS Commissioner said that the agency would work to increase its focus on wealthier taxpayers. This came in response to questions from members of Congress about why people with low incomes were disproportionately targeted for audits, particularly applicants for the Earned Income Tax Credit.

According to research, filers who claimed this tax credit designed for workers with low to middle incomes were audited twice as often as people with incomes between $200,000 and $500,000 annually. In fact, these low-income taxpayers were the targets of 36% of all tax audits in 2017. The commissioner said that these claims were more frequently audited due to the complex regulations governing who is considered an eligible child for a family receiving the tax credit. However, he also said that he was willing to work with lawmakers to increase the number of audits for wealthier taxpayers.

In general, higher-income households are expected to be audited more frequently. They are more likely to owe significant amounts of taxes and have a greater interest in avoiding taxation. In addition, an audit that uncovered hidden assets would be far more lucrative if the taxpayer has a significant amount of secret income.

No matter a person’s income, an IRS audit can be a concerning event. Many filers may worry that they will be unable to satisfy an auditor’s demands, especially if they are self-employed or have other complicated tax issues. A tax attorney can help someone facing an audit protect themselves.