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‘Rich and famous’ have more to fear from the IRS

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in Small Business Tax,Small Business Tax Deduction Strategies

Alert: According to new data released by the IRS, your chance of being audited increases dramatically if your annual earnings hit seven figures. Conversely, taxpayers earning less than $200,000 have less cause for concern.  

The IRS Fiscal Year 2011 Enforcement and Services Results, released in January, show that the audit rate for taxpayers earning more than $1 million was approximately 12% in 2011, up from 8% in 2010, and double the 6% rate in 2009. In contrast, only 4% of taxpayers earning more than $200,000 were audited in 2011, up from approximately 3% for the previous five years. Finally, the audit rate for taxpayers earning less than $200,000 remained around the 1% level, the same as it’s been for the past few years.  

Overall, the IRS audited nearly 1.6 million of 141 million individual returns in 2011, just above 1%. Back in 2001, only 0.6% of all taxpayers were audited.

To read the complete IRS report, go to http://tinyurl.com/revenueenforcement.

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