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IRS steps up audits of the wealthy

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Millionaires were nearly twice as likely to receive a tax audit last year as they were the previous year, CNNMoney reported, according to data released by the Internal Revenue Service (IRS) this week.

Overall, 1.1 percent of taxpayers were audited last year; that’s about the same as in 2010. But for taxpayers with incomes between $1 million and $5 million, the number jumped to 12 percent — up from about 7 percent.

The IRS audited 21 percent of taxpayers with incomes between $5 million and $10 million, up from 12 percent in 2010. And 30 percent of the nation’s highest earners — reporting incomes of $10 million or more — were dealt audits. That’s up from about 18 percent in the previous year.

The IRS said its recent offshore tax evasion initiatives have contributed to the jump in audits of millionaires, because many offshore tax evaders are high-income earners. This year, the agency is offering taxpayers a reduction in penalties and no jail time for a limited window of time if they admit to having offshore accounts.