As the IRS targets wealthy Americans for audits, here are red flags for everyday filers
The IRS is still working on plans to avoid increased audits on taxpayers making less than $400,000 — but certain particulars of your tax return can invite scrutiny, regardless of income level, experts say.
The Treasury Inspector General for Tax Administration, or TIGTA, last week reported the IRS has made “limited progress” in developing the methodology for its audit coverage calculation to comply with a directive from the U.S. Department of the Treasury.
In August 2022, Congress approved $80 billion in IRS funding, including tens of billions earmarked for enforcement. The same month, the Treasury issued a directive to the IRS, saying the funds couldn’t be used for increased audits on small businesses or households earning less than $400,000 annually.
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In response, the IRS agreed to TIGTA’s recommendations and plans to document the development of its audit methodology, the report said.
Meanwhile, the IRS has continued to focus enforcement efforts on higher earners, large corporations and complex partnerships. The Treasury Department on Friday announced $1.3 billion has been recovered from “high-income, high-wealth individuals.”
“It’s not right that everyday Americans pay taxes while struggling to make ends meet, but some of the wealthiest in this country have been able to evade payment,” Treasury Secretary Janet Yellen said Friday at an event in Austin, Texas.