Chances of getting audited by IRS lowest in years

IRS will have fewer agents auditing returns than at any time since at least the 1980s
Associated Press
Apr 13, 2014

As millions of Americans race to meet Tuesday's tax deadline, their chances of getting audited are lower than they have been in years.

Budget cuts and new responsibilities are straining the Internal Revenue Service's ability to police tax returns. This year, the IRS will have fewer agents auditing returns than at any time since at least the 1980s.

Taxpayer services are suffering, too, with millions of phone calls to the IRS going unanswered.

"We keep going after the people who look like the worst of the bad guys," IRS Commissioner John Koskinen said in an interview. "But there are going to be some people that we should catch, either in terms of collecting the revenue from them or prosecuting them, that we're not going to catch."

Better technology is helping to offset some budget cuts.

If you report making $40,000 in wages and your employer tells the IRS you made $50,000, the agency's computers probably will catch that. The same is true for investment income and many common deductions that are reported to the IRS by financial institutions.

But if you operate a business that deals in cash, with income or expenses that are not independently reported to the IRS, your chances of getting caught are lower than they have been in years.

Last year, the IRS audited less than 1 percent of all returns from individuals, the lowest rate since 2005. This year, Koskinen said, "The numbers will go down."

Koskinen was confirmed as IRS commissioner in December. He took over an agency under siege on several fronts.

Last year, the IRS acknowledged agents improperly singled out conservative groups for extra scrutiny when they applied for tax-exempt status from 2010 to 2012. The revelation has led to five ongoing investigations, including three by congressional committees, and outraged lawmakers who control the agency's budget.

The IRS also is implementing large parts of President Barack Obama's health law, including enforcing the mandate that most people get health insurance. Republicans in Congress abhor the law, putting another bull's-eye on the agency's back.

The animosity is reflected in the IRS budget, which has declined from $12.1 billion in 2010 to $11.3 billion in the current budget year.

Obama has proposed a 10 percent increase for next year; Republicans are balking.

Rep. Ander Crenshaw, R-Fla., chairman of the House subcommittee that oversees the IRS budget, called the request "both meaningless and pointless" because it exceeds spending caps already set by Congress.

Koskinen said he suspects some people think that if they cut funds to the IRS, the agency won't be able to implement the health law. They're wrong, he said.

The IRS is legally obligated to enforce the health law, Koskinen said. That means budget savings will have to be found elsewhere.

Koskinen said he can cut spending in three areas: enforcement, taxpayer services and technology. Technology upgrades can only be put off for so long, he said, so enforcement and taxpayer services are suffering.

Last year, only 61 percent of taxpayers calling the IRS for help got it. This year, Koskinen said he expects the numbers to be similar. To help free up operators, callers with complicated tax questions are directed to the agency's website.

"The problem with complicated questions is they take longer," Koskinen said.

Your chances of getting audited vary greatly, based on your income. The more you make, the more likely you are to get a letter from the IRS.

Only 0.9 percent of people making less than $200,000 were audited last year. That's the lowest rate since the IRS began publishing the statistic in 2006.

By contrast, 10.9 percent of people making $1 million or more were audited. That's the lowest rate since 2010.

Only 0.6 percent of business returns were audited, but the rate varied greatly depending on the size of the business. About 16 percent of corporations with more than $10 million in assets were audited.

Most people don't have much of an opportunity to cheat on their taxes, said Elizabeth Maresca, a former IRS lawyer who now teaches law at Fordham University.

Your employer probably reports your wages to the IRS, your bank reports interest income, your broker reports investment income and your lender reports the amount of interest you paid on your mortgage.

"Anybody who's an employee, who gets paid by an employer, has a limited ability to take risks on their tax returns," Maresca said. "I think people who own their own business or are self-employed have a much greater opportunity (to cheat), and I think the IRS knows that, too."

One flag for the IRS is when your deductions or expenses don't match your income, said Joseph Perry, the partner in charge of tax and business services at Marcum LLP, an accounting firm. For example, if you deduct $70,000 in real estate taxes and mortgage interest, but only report $100,000 in income.

"That would at least beg the question, how are you living?" Perry said.

Koskinen said the IRS could scrutinize more returns — and collect billions more in revenue — with more resources. The president's budget proposal says the IRS would collect an additional $6 for every $1 increase in the agency's enforcement budget.

Koskinen said he makes that argument all the time, but for some reason, it's not playing well in Congress.

"I say that and everybody shrugs and goes on about their business," Koskinen said. "I have not figured out either philosophically or psychologically why nobody seems to care whether we collect the revenue or not."



Dinghy Gal


Dinghy Gal

Give them more money to collect the Obama Care fines?


"I have not figured out either philosophically or psychologically why nobody seems to care whether we collect the revenue or not."

Maybe people are just tired, tired of the endless spending in DC, tired of a government gone unaccountable, tired of watching business go offshore and trying to compete while DC adds to your cost of doing business. Most know we are headed toward a Socialist state and those making a living and giving it away just may not give a damn anymore!


"About 312,000 employees owe the government a total of $3,519,410,517, according to the Federal Employee/Retiree Delinquency Initiative (FERDI) released on March 8, 2013, by the IRS."

Perhaps the IRS should go after these government workers first and make an example out of them. These workers are paid with the money we pay in taxes and then they won't even pay what they owe. Disgusting!


Wow 2 cents. You've really swallowed all the gloom and doom, and scare tactics from the rightwing media, haven't you? Rush and his allies have been preaching "this is the end of the world as we know it" for 20+ years (that's actually the lyrics to Glenn Beck's talk show theme song).

Yet, here we still are, and no one seems to care or notice that their predictions are almost always wrong. Fox and the feces throwers on AM talk radio do and say whatever it takes to rile up their conservative base - it's what gets them higher ratings.

Re: endless spending, of COURSE there will be endless spending in D.C. It costs money to run a country of 300 million people, and unless you don't want America to continue its existence, the spending HAS to continue.

Spending is only half the problem anyway - we've cut spending, and we're still in debt. We need more revenue to run the country. Cutting taxes when our country is in debt is no better than cutting YOUR paycheck when YOU are in debt. Can't pay off the debt without money.

The biggest spending, of course, is for things like military/defense and multi-million dollar subsidies and tax breaks for our 1%, which of course, are things the GOP feels we must do. Until your party wants to address gross overspending on those issues, any moaning you do about the federal deficit sounds silly.

What I am tired of are people who want government services, but who don't want to pay for them - and that pretty much means all conservatives.

I'm also tired of conservatives who say they stand for smaller government, but who actually WANT bigger government - as long as it's for things like military/defense, more government regulation for anti-abortion and anti-samesex marriage issues.


Tired of the wealthy coporatists getting free lunch AND subsidized for it.

Dinghy Gal

You've hit that nail on the head.


Having said that, we absolutely MUST collect taxes that are due. And here is where GOP-induced cuts hurt our ability to do that. Just how ARE we supposed to do a better job of chasing down tax deadbeats if we have fewer people to do it?


Yet you say nothing about 85 billion going to wall street. You are all for taxing the citizens but neglect the fact those same taxes will just be a handout to Democrat buddies that got him into office. Your hypocrisy is amazing.
Whether you want the cuts or not they are coming. They cannot print money forever. B.T.W There is a donation line on the tax form, How much did you tithe to your god?

The Big Dog's back

Gee,I thought Obama won the vote in 2008 and 2012.


And so did wall street.
Cannot answer the question can you. How much did you tithe to your god?

The Big Dog's back

I would gladly donate for the Presidential campaign fund if all other outside money were banned. How about you?


I forgot, you don't pay taxes and just leech. At the bottom there is a donation for extra taxes that your willing to give to the government to cover their waste and paying off buddies.
When you start paying taxes maybe you could then tell us how much you have donated.


Re:"I would gladly donate for the Presidential campaign fund if all other outside money were banned. How about you?"

Alluding to all the other outside money I do hope you are including the millions that the unions donate.

The Big Dog's back

All means all to me.


It was the Republicans who got the Glass-Stengel Act removed.


Re:Having said that, we absolutely MUST collect taxes that are due."

How about the federal employees that owe the government about 3.5 billion in back taxes maybe the government could just do a payroll deduction every payday until the money is paid. There would be very little expenses to do the deduction.

The Big Dog's back

If they owe it, collect it.

The Hero Zone's picture
The Hero Zone

Did I hear a call for a fair or flat tax?!

The Big Dog's back


The Hero Zone's picture
The Hero Zone


The Big Dog's back

A flat tax would do nothing but make the rich richer at the poor's expense.

The Hero Zone's picture
The Hero Zone

How? All you said was a slogan, not explain your thoughts. I'd like to understand your reasoning. I can buy bumper stickers at a souvenir shop. Just level with me why or how. I'm not looking to be contentious.

The Big Dog's back

If the rich knew they only had to pay 10% in taxes no matter how much they made, the sky would be the limit. And where do you think that money would come from? Off the backs and sweat of the poor and middle class, worse than it is now. We need a progressive tax.

Dr. Information

progressive…aka socialism tax. Big Dog keeps spewing out MSNBC points like a pinball machine.

The rich have become richer under Obama than any president before and you say this sky isn't the limit right now? You are really dumb.



WHY NOT??????


Only true that your chances of being audited are low IF your a socialist liberal.

The Senate is having hearings concerning the IRS who has admitted going after conservative groups. So much for a FREE and JUST society.


I think you mean you're, not your. Gotta love it when I hear people use the word "socialist". 98% of them never did so, until they heard the talking heads on Fox begin to use it, and most couldn't give you a definition of "socialism" to save their lives.

They just use it the same way they use "liberal" or "communist", as a term of derision. They don't know the difference between the terms, they just know that it must be something "bad".

Of course, they don't realize that the Social Security checks they'll cash someday, along with Medicare/Medicaid are examples of Socialism.
I read an article recently in which Republicans were asked if they were in support of a dozen or so government programs - each of which were obvious socialistic programs. The average Republican in the study was in favor of continuing 90% of the programs.

The funniest thing about the supposed IRS scandal is this: the only group that was actually censured by the IRS was a DEMOCRAT-leaning group. I'll bet Fox didn't report that...

The bigger question, of course, is why SHOULDN'T the IRS be able to point out when groups who obviously exist to support one party are trying to scam the system by reporting themselves as non-partisan?
Classic GOP dodge...they blame the accuser, so they don't have to admit their own wrongdoing.


You have been blaming everyone and everything for your gods failures and mistakes so your soapbox is actually a pot hole. I cannot understand why you enjoy a government who lies and targets the very same people they are supposed to be working for? Maybe the answer is it has not happened to your all glorious party yet. The saddest thing about the admitted targeting of opposition groups to the president and his goons is there are people like you who cheer them on thinking it will never happen to you. First degree hypocrisy.
I do know the difference between liberal and communist. A true liberal wants liberty for all not more laws and suppression of the citizen. Communist want suppression of the opposition and a totalitarian centralized government. Two opposite things. You are not for liberty and personalized sovereignty so that leaves............Go ahead you can guess.


If anyone can take Coasterfan, or Big Dog serious any more is beyond me. The only words out of their mouths is right wingnut, Fox, or Bush. Neither one can carry on a serious exchange without blaming someone else. If they think either party has all the answers, they have another think coming. The reason I consider myself an independent is I don't need to belong to any organization to think on my own. That includes political parties, street gangs, unions, cycle clubs, KKK, or any other group. It used to be enjoyable reading every ones thoughts on these threads until four people have tried to take them over.