- ORIGINAL NEWS
IRS aims to close ‘inequity gap’ for unpaid taxes. How the agency targets top earners for audit
- SUMMARY
The IRS is stepping up its efforts to target wealthy individuals and businesses who have not paid their fair share of taxes.
The agency plans to increase audits for high earners, complex partnerships, and individuals with notable assets.
They will use data analytics and artificial intelligence to uncover potential tax evasion and avoidance.
Areas likely to face increased scrutiny include partnerships with opaque structures, international tax issues, and cryptocurrency transactions.
Additionally, estate and gift tax returns with aggressive valuations may also face closer examination.
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“The tax gap, or the difference between taxes owed and paid, was an estimated $688 billion for tax year 2021, the IRS reported in October.”
“The audit rate for taxpayers earning $1 million or more was 0.7% in 2019, compared to 7.2% in 2011, according to the IRS.”
“The IRS will continue to crack down on top earners who haven’t paid taxes owed — and certain returns may see increased scrutiny, experts say.”
“The IRS is focused on “tiered partnerships,” or partnerships that own another one, which can provide an “opaque way” of hiding income, said Hylton, who is a former IRS commissioner for the agency’s small business and self-employed division.”