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. 

IRS Audit Capacity: Resource Constraints And Inequitable Results