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NYS Society of CPAs
March 22, 2021

Audits of Millionaires Have Dropped 72 Percent Since 2012
By Chris Gaetano

The downward enforcement trend on high-income taxpayers continued through 2020 as a recent report says that, overall, audits of millionaires has now shrunk by 72 percent since 2012. The report, from Syracuse University, said that fewer than 2 percent of taxpayers with incomes of a million dollars or more were audited in 2020, despite the absolute number of such people having doubled since 2012. While there were 40,965 audits of millionaires in 2012, that number in 2020 was a much smaller 11,331; revenues collected from these people, therefore, were also down: while in 2012 the government collected about $4.8 billion from them, in 2020 the IRS had collected $1.2 bilion. "With 98 percent of millionaires escaping any scrutiny, fewer audits in all likelihood means many millionaires escape paying billions of dollars owed the U.S. Treasury," said the report. The report found similar results when looking at corporate taxes. Only about one third of the 755 largest corporations in the country (those with over $20 billion in assets) faced an IRS audit last year; in contrast, in 2012, the report said the agency had audited 93 percent of returns from such companies. This has had the effect of making collections plunge from $10 billion to, in 2020, $4.1 billion. The report noted that this is only counting the largest corporations; if one accounts for companies reporting over $250 million in assets, then enforcement revenue has dropped from $24.4 billion in unreported taxes to $5.4 billion in FY 2020. Finally, referrals for criminal prosecution has also dropped to a historic low; such referrals are just a quarter of what they were at peak, in 1993.

Transactional Records Access Clearinghouse, Syracuse University
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