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Last year the risk that millionaires and billionaires would have their tax returns audited was 1-in-31. Every tax expert I know says the willingness to play audit roulette has been rising as audits of the rich and their companies have shrunk over the last three decades.
Tax audit roulette, not incidentally, is a much safer bet than spinning the wheel in Atlantic City where the odds are 19-to-1.
Audit rules for partnerships, which do not pay taxes directly, are dramatically more in favor of tax cheats. Over the last two decades, audit rates have ranged between 400-to-1 at the turn of the century to 224-to-1 in recently.
The falling audit risk is measured by the Transactional Records Access Clearinghouse (TRAC) at Syracuse University, which has a federal court order requiring the IRS to turn over data monthly.
TRAC’s latest report documents “an alarming and continued downward spiral in government audits of the wealthiest taxpayers and America’s corporate giants. Despite growing income inequality—where the top 1% of Americans control much of the wealth in the United States—less and less attention is being given by federal agents and investigators to determine whether these same individuals and businesses properly report their true incomes and pay taxes on these dollars. Billions of dollars are arguably at stake, as is American faith in the fairness of our federal tax system.”
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