Wealthy people would be increasingly scrutinized and audited by the Internal Revenue Service under President Biden’s tax proposal now making its way through Congress.
The bill proposes allocating an additional $80 billion and increasing enforcement power to the IRS over the coming decade to catch big corporations, and individuals earning more than $400,000 annually, that evade taxes.
The bill also would require business owners whose companies are not incorporated, including law firms, accounting offices and real-estate partnerships, to disclose more detailed information about their incomes.
The White House contends increased enforcement could raise an additional $700 billion by 2032, which would help pay for the president’s proposed American Families Plan, a $1.5 trillion bill to expand the social safety net to include universal preschool, paid family-leave programs and free community college among other programs.
According to a Syracuse University study, the IRS cut audits of people earning $1 million or more by 72% over the past eight years. Last year, only two out of 100 people making that much were audited.
Audits of America’s biggest companies also declined by 55% since 2012, a year in which nearly every corporate giant was audited.
AMG recommends the best way to avoid an audit, or pass one, remains making and keeping a pristine record of all financial transactions.