IRS Audit Rate Continues To Drop For High Income Households

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IRS audit rates for high-income households drop sharply in the wake of shrinking budgets and smaller employee numbers.

The Wall Street Journal reports that the Internal Revenue Service has audited only 0.59% of individual tax returns in 2018, which represents the seventh consecutive year that this rate has declined.

Facing tighter budgets and fewer workers, the audit rate is lower than 0.62% the year before. In fact, it is the lowest it has been since 2002, according to IRS data released last Monday.

Audits of highest-income households specifically dropped dramatically to their lowest rates since 2008, when data began to be collected.

In fiscal year 2017, 14.52% of return filers with more than $10 million in adjusted gross income had IRS audits, and this number decreased to just 6.66% in 2018. For households with an income between $1 million and $5 million, the audit rate slipped from 3.52% to 2.21% from 2017 to 2018.

This data release comes as the IRS attempts to demonstrate to Congress a need for increased long-term investments in the agency’s technology and staff.

Republicans in Congress remain doubtful about this need, and it is unclear whether the government will take action against the recent decline in tax enforcement.

Read the full story here.

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