Connect with us

Hi, what are you looking for?

Finance

2022 IRS Tax Audit: Low-Income Taxpayers Affected While Most High Earners Were Not

Internal Revenue Service [Photo: Fortune]
Internal Revenue Service [Photo: Fortune]

According to the 2022 IRS tax audit, low-income taxpayers are five times more likely to undergo audits compared to a taxpayer with high incomes. The lack of attention toward high earners forced the Internal Revenue Service (IRS) to shift its focus to the low earners.

Tax Audit

Tax Audit

Syracuse University’s Transactional Records Access Clearinghouse (TRAC) studies the Internal Revenue Service (IRS)’s internal management reports every month. Upon examining the 2022 data, the group noticed a different trend, especially on how IRS heavily depends on automatically produced letters distributed to taxpayers.  According to the data, the IRS performed 85% of its audits through letters. Audits in the fiscal year 2021 totaled to 659,003 but dropped to 626,204 in the fiscal year 2022 amidst the 164 million income tax returns filed in 2022. 

According to Aitken, the rate of income tax audits from the low-income bracket reached 12.7 per 1,000 compared to those in the high-income with 2.3 per 1,000. The chances of a high earner undergoing audit is around 1.1% only. This approximately matched the data during the fiscal year 2021 where the low-income bracket reached 13 per 1,000 and the high-income reached 2.6 per 1,000. This rate even nearly doubled the rate from the fiscal year 2020 which only recorded 7.9 per 1,000 for the low-income bracket. According to the TRAC, this lack of attention toward the high earners forced the IRS to shift its focus to the low earners.

READ ALSO: Man From Massachusetts Held Without Bail After Assaulting 2 Teenage Girls

Act to Resolve This Issue

Fortunately, according to a White House spokesperson, the U.S. President Joe Biden’s Inflation Reduction Act will force wealthy tax cheats to remit their fair share. This act will also provide IRS with $80 billion in future finances to develop its audits and potentially target the taxpayers with the highest incomes. In turn, this will make it easier for the working Americans to obtain their tax refunds. The spokesperson also held the Republicans liable for attacking the IRS’ finances and claimed that the high earners’ tax cheats constitute the $163 billion in tax evasion every year, as reported by Aitken.

READ ALSO: IRS Delays New Tax Rule Of Reporting Over $600 Venmo, Paypal Payments For A Year

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *