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A third of the rich audited

By Judy Martel · Bankrate.com
Tuesday, March 27, 2012
Posted: 5 pm ET

For three years, the Internal Revenue Service has been stepping up its oversight of taxpayers who report more than $10 million in income. In 2011, the IRS audited almost 30 percent of them.

While the percentage of individuals audited overall has held steady at 1.1 percent for the past few years, the rate has been climbing for the ultrarich. In 2010, 18 percent were audited, up from 10.6 percent in 2009, according to an IRS report.

The IRS created a special unit in 2009 to examine the tax returns of the wealthy after nearly 15,000 Americans with offshore bank accounts voluntarily came forward to avoid prosecution for tax evasion. At the time, IRS Commissioner Douglas Shulman said the previously hidden accounts would generate billions of dollars in new tax revenue.

Some think the rich already don't pay their fair share since so many derive income from capital gains, generally taxed at 15 percent, rather than regular income, which tops out at 35 percent. Until the tax code is reformed, the IRS seems determined to make sure the rich can't illegally avoid paying any taxes.

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