The IRS’s overall audit rate fell last year to the lowest level since 2002, with audits of the highest earners declining by more than half.

The audit data released as part of the IRS’s 2018 databook reflected the continuing impact of cuts on the agency’s enforcement budget. Between 2010 and 2016, the number of individual tax returns filed in the U.S. increased by 7%, while IRS funding fell by 18%.

For the highest income taxpayers — returns showing adjusted gross income of $10 million or more — the audit rate dropped from 14.52% in 2017 to just 6.66% last year. For households with $5 million to $10 million in adjusted gross income, the audit rate dropped from 7.95% to 4.21%.

Overall, the IRS audited audited about 892,000 individual returns last year, for a rate of 0.59%, compared with 934,000 individual returns in fiscal 2017, a rate of 0.62%.

In 2015, about 35% of households earning more than $10 million had their taxes audited by the IRS.

“From 2017 to 2018, audits of taxpayers with more than $10 million in income were cut in half. On top of massive tax breaks, wealthy taxpayers with savvy accountants may not even pay what they do owe, knowing that tax avoidance and evasion strategies are unlikely to receive scrutiny,” Senate Finance Committee ranking member Ron Wyden, Oregon Democrat, said in a news release.

“Congress needs to give the IRS the sustained resources it needs to ensure high fliers pay their taxes,” he added.

At a hearing earlier this month, Treasury Inspector General for Tax Administration J. Russell George said the IRS is collecting more than $3 billion less than it otherwise could each year because of a staffing decline in revenue officers.

The IRS is currently lobbying Congress for a budget increase, and President Trump has actually requested $200 million, or 1.5%, increase in its agency’s funding. But congressional Republicans remain skeptical. Sen. John Kennedy, Louisiana Republican, told The Wall Street Journal that he’s “not into throwing money at the wall just because the bureaucracy says we need more.”

, , ,

2 responses to “IRS Audit Rate for Highest Earners Falls by Half”

Leave a Reply

Your email address will not be published. Required fields are marked *