July 7, 2022 - Douglas Myser

After audit decline IRS to audit more. After a long period where the IRS was auditing less, especially against the richest Americans, the trend is finally swinging back to more audits. The reason has to do with ballooning federal budget deficits. The Biden Administration has made it a priority to give the IRS additional funding so it can ramp up the number of people it has, and change over its 1960s antiquated computer system, the oldest in the entire government. A General Accounting Office audit showed that audit's among the richest Americans decreased the most during the last two decades. The reason was those audits are more complicated, take up more resources which at the time the IRS did not have. The staffing decreases at the IRS were the main culprit of this. In 2019, the audit rate was the lowest of all years looked at, for taxpayers with incomes between $25,000 and $500,000. After audit decline IRS to audit more.

EITC audit rates were likely higher for many other taxpayers because EITC audits are limited in scope and less time consuming, according to IRS officials. The GAO also studied the results of audits by income level, in terms of how much additional tax the IRS assessed as a result. The higher the income cohort, the more tax was assessed. As audit rates decreased during the decade, so did the amount of additional tax, from more than $8 billion in 2010 to about $4.9 billion in 2019. The amount fell further in 2019 to $3.7 billion before rebounding after that. It now appears that the audit rates among the rich are boing back the other way, more audits being performed, and one has to wonder how much the politics of the Biden election played into this.

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