How I.R.S. Audit Targeting Has Changed

IRS Commissioner Mark W. Everson gave us some idea of how audit targeting has changed in recent years (at washingtonpost.com, which requires free registration to view articles):

IRS figures show that 0.65 percent of all individual taxpayers — roughly one in 150 — were audited in , up from 0.57 percent the year before. The audit rate among taxpayers with incomes of $100,000 or more rose to 1.06 percent from 0.86 percent. In , by contrast, the overall audit rate for individuals was 1.67 percent, and that for high-income taxpayers was 3.21 percent.…

The agency also pointed to a more than 9 percent jump — to $35.5 billion — in money collected from taxpayers as a result of enforcement efforts. The amount had been nearly flat at about $32 billion for .

At the same time, Everson said, IRS surveys indicate that the number of Americans who “believe it is okay to cheat on their taxes,” had risen to 17 percent , from 11 percent in .…

Much of the recent rise in audits was among what the IRS calls correspondence audits, in which the agency writes a letter to a taxpayer asking him or her to justify something on the return, such as the amount of mortgage interest deducted. “Field” audits, in which the taxpayer meets face to face with an IRS employee, climbed slightly to 206,457 in from 205,134 . In , there were 761,850 field audits, according to agency figures.…

The IRS figures also noted a continuing upturn in the number of levies, liens and seizures — key collection tools whose use fell drastically in the wake of Senate Finance Committee hearings in that were highly critical of the agency and resulted in enactment of the reform law.

As with audits, though, all three remained far below levels of the . Seizures of taxpayer property declined the most: 399 compared with 10,449 in .

An Associated Press article adds:

Audits of the nation’s largest corporations, nevertheless, fell for . About 12 percent of corporations with assets exceeding $10 million were audited, compared with more than 14 percent . Audits for small and midsize businesses also dropped slightly.


And while I’m on the topic of the IRS… Lewis Mumford once said that “robbery is probably the greatest labor-saving device ever invented.” Well, some people can’t leave well enough alone, and have to come up with extraordinarily complex and labor-intensive modes of robbery. Case in point: Jeffrey Hlinak of Connecticut.

Jeffrey Hlinak would buy an item at a department store, buy numerous copies of the same product at a discount store, doctor the department store receipts and then collect higher-priced refunds on the items he bought at the discount stores, authorities said…. He allegedly spent the past three years criss-crossing the country to pursue the scheme, staying in cheap motels.

He had $800,000 in the bank when they caught him, so he was certainly no slacker.