IRS Audit Capacity: Resource Constraints And Inequitable Results
June 8, 2022 | The Insider: White Collar Defense and Securities Enforcement
For more than a decade, and most recently this past February, I have detailed the myriad challenges to the IRS’s core functions created by repeated cuts to its budget since 2010. One (perhaps intended) consequence of those budget cuts is a decline in the rate at which the IRS audits income tax returns. Last month, the Government Accountability Office issued a report to the Oversight Subcommittee of the House Ways and Means Committee analyzing IRS audit rates for individual taxpayers according to income bracket. Unsurprisingly, the GAO found that “[f]rom tax years 2010 to 2019, audit rates of individual income tax returns decreased for all income levels,” with an overall decline from an average audit rate of 0.90% to 0.25%. In real numbers the drop is even starker: from approximately 1.27 million audits in 2010 to less than 387,000 in 2019—even while the number of individual tax returns filed increased from 142 million to nearly 157 million.