IRS: Our auditors gun for millionaires
Commissioner denies cited data that say audits for the wealthy fell 19%.
The FixersWASHINGTON (Reuters) -- The U.S. Internal Revenue Service is focusing its audits on wealthy individuals and corporations as part of a broader effort to crack down on international tax cheats, the agency chief told lawmakers Tuesday.
"Our long-term investment is to have a trend where wealthy individuals, large corporations, (those) who have really benefited from being in the United States, we're going to make sure that they pay their taxes," IRS Commissioner Douglas Shulman told a U.S. House of Representatives Appropriations subcommittee hearing on the agency's 2010 budget request.
Shulman refuted data cited by Representative Jose Serrano, chairman of the subcommittee, that the IRS audit rate for millionaires fell 19% between fiscal 2007 and 2008. Serrano's information came from a Syracuse University database system that tracks government agencies.
"That number did not decrease by 19%," Shulman said, adding there was a slight decline because the overall number of audits grew.
The average taxpayer has a 1% chance of being audited compared with a 5.5% chance among millionaires, Shulman said.
Shulman, who was appointed by former President George W. Bush, has said enforcement of international tax laws is his top priority.
"For many years, some people have felt safe and some financial institutions have marketed 'come and hide your assets here,"' Shulman told the lawmakers.
The U.S. government is now suing UBS AG (UBS) to retrieve thousands of names of American clients who stashed money in secret accounts. The Swiss banking giant settled with the Department of Justice in February to avoid criminal charges after agreeing to pay a $780 million fine.
UBS is fighting the civil suit, claiming compliance would require UBS employees to commit fraud in Switzerland.
In March, the IRS began a six-month voluntary amnesty program to encourage individuals and companies evading U.S. taxes in offshore accounts to come clean in exchange for lower penalties and in most cases avoiding the risk of criminal prosecution.
"We've seen a significant uptick in our voluntary disclosure program," Shulman said.
The Syracuse University data also found an "historic collapse" in IRS audits of corporations with $250 million or more in assets, according to its Transactional Records Access Clearinghouse Web site. The rate of such audits fell to an all- time low of 26% in fiscal 2007 from 43% in fiscal year 2005, it added. 
