Don’t tell me if you do, I’m going to assume that all Sweating The Big Stuff readers are trustworthy and report all income and only qualifying expenses to the IRS.
Many other people try to avoid paying their taxes. In fact, in a recent study, DDB WorldWide Communications group found that 15% of Americans admitted to fudging their taxes. I assume that the actual number is a bit higher, because not everyone admits their mistakes, especially if they’re on purpose.
In the same survey, it’s clear that there’s a certain portion of society that is more likely to cheat. Here are a few quick stats:
- 64% of cheaters were men
- 47% of cheaters were single (including divorced or widowed)
- 55% of cheaters were under the age of 45
- These percentages were all significantly higher for the self-proclaimed cheaters than for non-cheaters
What Are Possible Outcomes?
On average, the IRS audits just over 1% of all taxpayers. However, they audit 12% of taxpayers who make over $5 million and a whopping 18% of taxpayers who make over $10 million. Clearly they’re targeting the rich!
If you think about it, this makes a lot of sense. Assuming that they have to spend the same amount of resources auditing someone who makes $10 million and someone who makes $100,000, the IRS is probably going to recoup more money from the person making $10 million. For the same amount of work, why not go after the ones that will net a higher return?
And guess what? It’s working! The IRS collected $57.6 billion from auditing last year, a jump of 18%!
Similarly, if these results hold up and the percentages mentioned above are significantly higher, then it makes sense for them to target single men under the age of 45. After all, they’re more likely to catch a single man under the age of 45 than anyone else.
I would not at all be surprised if the percentages of tax returns of single men under 45 that were audited increased in the coming years. While it may not have the impact of auditing high income earners, it does make sense to divert some attention away from those less likely to cheat to those who are more likely to cheat.
Readers, do you think targeting single men under 45 is a slippery slope? Should the IRS use more resources on those more statistically likely to cheat?