The Internal Revenue Service (IRS) has reportedly let billions of dollars in tax revenue “slip through its fingers” as budget and staffing cuts have left the agency “incapable of fairly and effectively” auditing the 637,212 millionaires now living in the US, according to a new study from Syracuse University.
It found that less than two out of every 100 taxpayers reporting over a million dollars of income were audited last year. While the ranks of millionaires have nearly doubled since 2012, the number of millionaire returns that were audited has fallen 72% to 11,331 according to the study, down from 40,965 millionaire audits in FY 2012.
In FY 2012, audits of millionaires turned up $4.8bn in unreported taxes. With less than a third the number of audits now, however, the government uncovered only $1.2bn in unreported taxes in FY 2020.
According to Syracuse University, with 98% of millionaires “escaping any scrutiny, fewer audits in all likelihood means many millionaires escape paying billions of dollars owed the U.S. Treasury”.
As well as unaudited accounts of millionaires, it found that nearly two out of every three of the 755 largest corporations in the country, those with over $20bn in assets, were not audited last year. As recently as 2012, nearly all such returns (93%) were being examined by the IRS.
Audits in 2012 of these corporate giants turned up $10.0bn dollars in unreported taxes however. This has reportedly dropped by more than half to $4.1bn during FY 2020. Audits of these large corporations in FY 2012 turned up $24.4bn in unreported taxes, though this fell to $5.4bn in FY 2020.
The report said: “As public attention focuses on how the country can restore faith in our democratic institutions, one area that should not be overlooked is how the nation can better ensure that our income tax laws are fairly and effectively administered.”