IRS Audit Rate Dropping Lower and Lower

Saturday, April 19, 2014

The likelihood of a taxpayer being audited by the Internal Revenue Service (IRS) is now less than 1% as the embattled agency struggles to carry out a key part of its mission.


In 2013, IRS auditors reviewed only 0.9% of returns filed by individuals earning less than $200,000 a year. That rate was the lowest since 2005. IRS Commissioner John Koskinen told the Associated Press that the audit rate likely will go down even further this year.

The chances of getting audited is much higher for the wealthy—about 11% for those making $1 million or more annually. For businesses, the audit rate was only 0.6% last year. It was 16% for large corporations, those with assets exceeding $10 million.


Koskinen says the drop in audits is due to budget cuts imposed by Congress.


“We keep going after the people who look like the worst of the bad guys,” Koskinen told the AP. “But there are going to be some people that we should catch, either in terms of collecting the revenue from them or prosecuting them, that we’re not going to catch.”

President Barack Obama has proposed a 10% increase in the IRS budget for next year.


House Republicans, however, are unlikely to support such a bump in light of GOP allegations that the IRS targeted conservative groups seeking tax-exempt status. At least three congressional investigations are probing this controversy.

-Noel Brinkerhoff


To Learn More:

IRS Cuts Mean Fewer Audits (by Stephen Ohlemacher, Associated Press)

IRS Audit Rate Hits New Low (by Michael Cohn, Accounting Today)

IRS Doing More Audits of Large Partnerships (by Michael Cohn, Accounting Today)

IRS Audits Drop to 8-Year Low (by Noel Brinkerhoff, AllGov)

IRS Plans to Cut Back Auditing of Large Corporations (by Noel Brinkerhoff and Danny Biederman, AllGov)


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