IRS Audits Decline for Millionaires and Large Businesses
IRS audits of wealthy taxpayers and big business are on the downtick, reaching record lows in nearly a decade.
According to a recent report published by Syracuse University’s Transactional Records Access Clearinghouse (TRAC), taxpayers filing $1 million of income or more on their tax return are less likely to be audited than in years past.
The report found that audits of returns with over $1 million of income peaked in 2015 with 39,753, whereas 2018 dropped down to 16,305. A number of factors could contribute to this decline.
Staffing levels were reduced by 22 percent between 2010 and 2018, the report found.
Budget cuts and reduced staffing may add to the decline in audits targeting wealthy taxpayers, but the agency is also reallocating resources to focus on growing priorities. The Tax Cuts and Jobs Act enacted in December of 2017 is the largest tax reform in over three decades. The IRS is turning its spotlight on tax reform and its implementation. It is also targeting other important issues, like arming against identity theft and refreshing outdated technology.
In addition to the decline in individual IRS audits, large businesses are also seeing a major cut in IRS audit rates. The TRAC report shows that over half of businesses reporting over $20 billion in assets were not audited in 2018.
By reducing the number of IRS audits on wealthy taxpayers and large businesses, concurrently, the number of criminal convictions have dropped and revenue generation has fell by billions.
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