Following budget cutbacks, the IRS focuses on the rich to get more bang for its buck.
The trend by the IRS to switch its focus from auditing the middle class to auditing the wealthy is expected to continue in 2017, according to Private Wealth in “This Year’s Audits Are Bad News For The Rich.”
The IRS has set its targets in the past on middle class taxpayers rather than the wealthy, because the wealthy would hire attorneys and accountants to battle for them. However, years of budget cutbacks have changed the agency’s tactics.
There is more money that the IRS can get by auditing the wealthy than by making sure that middle class Americans have filed all of their taxes correctly.
The IRS is expected to go after common ways the wealthy often lower their tax bills and challenge them to prove that they have done everything correctly.
For example, a charitable deduction over a certain limit might trigger the IRS to send a letter demanding proof of the donation. Reporting that money was put into a 529 education savings plan over a certain amount could also trigger an automatic letter, as could a number of other common practices.
An estate planning attorney can guide you into plans that fit your unique circumstances.
Reference: Private Wealth (Feb. 28, 2017) “This Year’s Audits Are Bad News For The Rich.”
