Tax cheats, rejoice: IRS audit rate at lowest in decade
If you took liberties on your 2014 federal tax return, you picked a good year to do it.
The odds of a U.S. taxpayer facing an IRS audit fell to the lowest level in more than a decade during the 2015 federal fiscal year, according to preliminary data the U.S. tax agency released Tuesday.
The audit coverage rate, the percentage of federal tax returns the IRS examined either in person or by mail correspondence, dropped to 0.84%, the IRS said. The rate was the lowest since 2004, and the decline marked the third consecutive year with audit coverage below 1%.
IRS personnel audited slightly more than 1.2 million individuals during the fiscal year, the preliminary data show. That marked a 1.1% decline from 2014 and a nearly 22.3% drop from fiscal year 2010.
As a result, audit collections this year dropped to $7.32 billion, the lowest level since 2002. Audit-generated revenue averaged $14.7 billion annually from 2005 to 2010, but the average dropped to $10.5 billion per year since 2010, the IRS said.
The declines came amid cuts in IRS budgets and head count, as well as a rise in the number of individual federal returns filed for three of the past four years.
Staffing reductions contributed to the worst level of IRS taxpayer services in years as phone calls dropped by the agency’s switchboard soared past 8 million and rates of calls answered fell.
Repeating his previous calls for increased funding, IRS Commissioner John Koskinen said fewer audits and reductions in IRS service could lead to increased tax cheating and other problems.
“If people think they’re not going to get caught if they cheat, or they’re just fed up because they can’t get the help they need from us to file their taxes, the system will be put at risk, and voluntary compliance is likely to suffer,” Koskinen said during a speech at the American Institute of Certified Public Accountants’ national conference in Washington.
“If people think they’re not going to get caught if they cheat, or they’re just fed up ... the system will be put at risk.” IRS Commissioner John Koskinen