The Internal Revenue Service (IRS) recently stated that it is going to focus its efforts on millionaires who may have used illegal tactics to avoid their tax obligations. The announcement was part of the agency’s recent news release outlining a focus on “restoring fairness” within the tax system.
IRS Commissioner Daniel Werfel further told reporters that in addition to the use of artificial intelligence and algorithms to sort through their data and shift focus on millionaires for further scrutiny, he also plans to specifically target the 1,600 millionaires who already owe more than $250,000 in back taxes.
Why focus on millionaires?
As discussed in the report noted above, the efforts are likely supported by IRS research from 2021 that found the top 1% of income earners fail to report more than 20% of their earnings.
What if I am the target of an audit?
If the IRS follows through and uses the influx of funding to target the wealthy, it is possible that those who have failed to file tax returns, underreported income, or otherwise attempted to thwart their tax obligations could find themselves the subject of an audit. It is also possible that innocent, well-meaning taxpayers could find themselves in the agency’s crosshairs.
Those who receive notification of an impending audit are wise to review the mailing closely. It should include information about the reason for the audit. It is also important to check for any deadlines. The agency is fierce in its use of deadlines, and a failure to respond or request an extension within the appropriate timeframe can limit your options for recourse.
It is also important to take the matter seriously. An audit can result in an increased tax bill or, depending on the details of the agency’s findings, allegations of criminal wrongdoing. An attorney can review your case and provide guidance to better ensure a more favorable outcome.