While the IRS may have stopped targeting conservatives, a new inspector general report encourages the tax agency to target wealthy taxpayers at higher rates than those with lower incomes.
The report from the Treasury Inspector General for Tax Administration advises the IRS to focus its audits on taxpayers making over $600,000, rather than those making between $200,000 and $399,999 - because auditing the highest earners makes the IRS more money, reported The Daily Caller.
The IRS currently devotes nearly 50 percent of its high-income audits to taxpayers earning $200,000 to $399,999, but those tax returns present the least productivity of all high-income taxpayers, the inspector general said.
Over 62,000 audits were conducted on Americans who earned between $200,000 and $399,999, while only 6,309 audits were performed on incomes exceeding $5 million.
The report highlights that the IRS only brings in $605 in additional taxes for every hour spent auditing incomes in the $200,000 to $399,000 range, however, it earns $4,500 per hour auditing incomes over $5 million.
Congressional budget cuts have forced the IRS to reduce its audits, with the overall percentage of individual taxpayers audited each year now at 0.84 percent. Despite this, the highest-income and most productive taxpayers have seen the biggest decline in audit rates and the IRS spent more than four times as many hours auditing the least productive taxpayers in the lower income bracket, according to USA Today.
"Given the IRS's goal of providing higher audit coverage to high-income taxpayers and its reduced operating budget, it is that much more important that the IRS selects audits that have the highest compliance impact," the report says. "IRS management told us that decisions on resource allocation cannot be made solely on the basis of productivity measures alone. However, given the decreasing budgets that the IRS is working under, it is critical for the IRS to determine the best use of its limited resources."
The IRS tries to focus audits on wealthier Americans because they are more likely to use complex financial arrangements to manage their money and skirt taxes, the Washington Times notes. The increased rates of audits keep them in compliance and encourage them to pay their fair share.
