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Is IRS going easy on the rich?

March 24, 2009

Maybe. The Transactional Records Access Clearinghouse at Syracuse University says that the audit rate for returns showing over $1 million income fell 10% last year, reports the TaxProf.

Kay Bell is also on the case. She also reports that the IRS says the TRAC records are misleading:

IRS spokesman Bruce Friedland told Tax Analysts that the data from 2007 that TRAC used to show 2008's decline in audits of wealthy taxpayers are based on returns reporting $1 million or more from so-called positive income. These returns do not not include losses.
"It's a slightly different slice, but they are not really comparable because of the underlying definitions," Friedland said. He also pointed out that 2008 was the first year the IRS began collecting data based on adjusted gross income.

I think they're saying that if you have $1 million or more in income, but you bring it down with losses to something much less, you are more likely to get a visit than somebody who has, say, a $1 million W-2 but no above-the-line losses.

Tags: Kay Bell.tax administration.TaxProf.