IRS Personal Income-Tax Audits Drop to Lowest Level in Decades
WASHINGTON—Individual taxpayers are half as likely to get audited as they were in 2010, after tax enforcement by the Internal Revenue Service fell to the lowest level in at least four decades. The IRS audited 0.45% of personal income-tax returns in fiscal 2019, down from 0.59% in 2018 and marking the eighth straight year of decline, according to a report released on Monday. In 2010, the IRS audited 1.1% of tax returns. The report doesn’t break down audits by income category or provide details about how much revenue they generate.
The steady erosion of tax enforcement has been driven by years of cuts in the agency’s budget along with a heavier workload. The result, according to tax experts, is that the Treasury is letting billions of dollars annually go uncollected, even as budget deficits rise.
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Investing in enforcement and tightening rules could generate about $1 trillion over a decade, according to Harvard University economist Lawrence Summers, who served as Treasury secretary in the Clinton administration, and University of Pennsylvania professor Natasha Sarin. The government estimates that each additional dollar spent on tax enforcement could yield more than $4 in revenue, and Democratic presidential candidates have made increasing IRS funding part of their agenda.
The IRS budget is about 20% below the 2010 peak in inflation-adjusted dollars, according to the Congressional Budget Office. During that time, Congress has given the agency more responsibility, including the implementation of the 2010 health care law and the 2017 tax law. In Monday’s report, the IRS said the agency had lost almost 30,000 full-time positions since fiscal 2010, in areas including enforcement and criminal investigation. It now has about 78,000 workers and has been hiring over the past year. But the agency also projects that up to 31% of remaining workers will retire within the next five years.
The cuts began as part of a fiscal-austerity push after Republicans won a majority in the House of Representatives in 2010 and continued after the IRS said in 2013 that it had given improper scrutiny to some conservative groups seeking nonprofit status.
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https://www.wsj.com/articles/irs-personal-income-tax-audits-drop-to-lowest-level-in-decades-11578352541 (paid subscription)
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