Chances for a US tax audit have rarely been this low

As millions of Americans file their income tax returns, their chances of getting audited by the IRS have rarely been so low. The number of people audited by the IRS in 2016 dropped for the sixth straight year, to just over 1 million. The last time so few people were audited was 2004. Since then, the U.S. has added about 30 million people.

The IRS blames budget cuts as money for the agency shrunk from $12.2 billion in 2010 to $11.2 billion last year. Over that period, the agency has lost more than 17,000 employees, including nearly 7,000 enforcement agents. A little more than 80,000 people work at the IRS.

IRS Commissioner John Koskinen said budget cuts are costing the federal government between $4 billion and $8 billion a year in uncollected taxes.

“We are the only agency if you give us more people and money, we give you more money back,” Koskinen said in an interview. So is it safe to cheat on your taxes? Not necessarily, according to tax experts. “I don’t think it’s open season for people to cheat,” said Joseph Perry, a partner at the accounting firm Marcum. “I think there are a certain group of people that will always try to push the envelope to get away with things that they think they can get away with.”

As Koskinen put it: “If you’re a taxpayer, you don’t want to roll the roulette wheel and have the little white ball land on your number because then we’re not very happy.” Most people don’t have much of an opportunity to cheat on their taxes because the IRS collects a lot of information to verify taxpayers’ finances. Employers report wages, banks report interest, brokerages report capital gains and lenders report mortgage interest.

In 2016, the number of people audited by the IRS dropped by 16 percent from the year before. Just 0.7 percent of individuals were audited, either in person or by mail. That’s the lowest audit rate since 2003. The higher your income, the more likely you are to be audited. The IRS audited 1.7 percent of returns that reported more than $200,000 in income. Agents audited 5.8 percent of returns that reported more than $1 million in income.

Both audit rates were steep declines from the year before. The most wellknown audit in Washington is one on President Donald Trump, who has cited it in refusing to release his tax returns. The IRS, however, has said an audit would not prevent an individual from releasing the returns. Corporate audits were down by 17 percent last year. Just 0.49 percent of corporations were audited, the lowest rate in at least a decade. Republicans in Congress began cutting money at the IRS after they took control of both the House and Senate in the 2010 elections. They became more enthusiastic about the spending cuts after it became public that the agency had improperly singled out conservative political groups for extra scrutiny when they applied for tax-exempt status during the 2010 and 2012 elections.

Koskinen was not at the IRS when the political groups were mistreated, but some Republicans in Congress have been unhappy with his cooperation in their investigations. When asked about IRS money, many Republican lawmakers inevitably mention the mistreatment of conservative groups. “Go look at all the areas where they’ve wasted money, mismanaged taxpayer resources,” said Rep Jim Jordan, R-Ohio. “Not to mention the fact that, you know, one of the reasons we went after them so hard is they did target people for their political views.” — AP