WASHINGTON (CBS DC) — The Internal Revenue Service audit rate for individual Americans’ tax returns fell to the lowest level in over a decade – and are expected to drop even further this year.
According to IRS Service data obtained by USA Today, individuals faced the least likely possibility they would be audited in 2014, with only a 0.86 percent chance of having IRS agents examine one’s tax returns either in person or through correspondence.
Although tax audits increased steadily from 2005-2010, the number of IRS audits for individual taxpayers decreased by 21.4 percent over the past five years. The data shows that the 0.86 percent audit rate is the lowest is has been since at least the fiscal year 2005.
Audits dropped in nearly every individual category and across all income levels despite the number of individual tax returns filed increasing in all but two of the past nine years, the data obtained by USA Today shows. Among taxpayers with income of less than $200,000 in 2014, the IRS audited slightly fewer than 1.1 million individuals – down from more than 1.4 million in 2010.
Nearly 41,000 individuals with an annual income exceeding $1 million faced audits in 2012 – a number that fell to nearly 34,000 last year.
The data parallels a steady falloff in revenue agents amid recent drops in funding for the tax collection agency. Additionally, the IRS is seeking congressional approval for a 2016 fiscal year budget at a time when the agency faces continued allegations it targeted conservative tax-exempt groups for added scrutiny.
Speaking with USA Today, IRS Commissioner John Koskinen conceded the tax collection agency is “not the world’s most beloved.” But he also cautioned that the audit decrease could eventually “corrode” Americans’ faith in the federal tax system and voluntary compliance in paying taxes.
“At this point, we do have a tax compliance ethos and people pay their fair share,” said Koskinen, who’s expected to cite the audit trend during a Tuesday speech to New York State Bar Association’s tax section. But he added: “If you’re in Des Moines and you’re writing that check, and you feel that maybe your neighbor down the street isn’t, or is getting away with something, that’s a problem.”
Koskinen said “anyplace in the IRS is short-staffed” and that shows the IRS’s overall personnel count is down to 13,000 but will increase to an estimated 16,000 this year.