IRS will audit fewer taxpayers this year because of budget cuts.
IRS agents are vital during the income tax filings. They are the ones who make sure that the reports submitted to the taxing authorities are correct. If the documentation is not complete, then they have to return them to the taxpayers for a secondary revision. However, as the volume of filings is too high, IRS decided to select a certain number of audits each year. Thus, the examined documentations are just the result of a random selection which has been a controversial subject since the beginning of this practice. However, this year the budget cuts led to a record low number of income tax audits.
Millions of American citizens are filing their income tax returns until April 17th this year. However, the number of people who will receive a tax audit dropped for the sixth year to just 1 million persons. This is the lowest amount since 2004 when the IRS inspected around the same number of people. Since that year on, the U.S. selected 30 million more people.
The government agency justified this weak performance as a result of the recent budget cuts. While in 2010 IRS received $12.2 billion, last year the agency had to manage with $11.2 billion. Since 2010 onwards, the service lost 10,000 employees and 7,000 enforcement agents. At this moment, the organization has a total of up to 80,000 workers.
John Koskinen, the IRS Commissioner, stated that budget cuts not only affects internal business form but the citizen’s activity as well. Thus, this procedure cost the federal government up to $8 billion in uncollected taxes each year. The Commissioner described his agency as the only one that can deliver more assets if they receive more workers and funds. On the other hand, Koskinen encouraged people not to take advantage of the situation and cheat on their taxes. If the lottery picks them for a tax audit, the IRS agents will not close their eyes.
Last year, 16% fewer people were audited either by email or face to face. This was the lowest percentage since 2003. However, the type of income can be a decisive element in choosing the audited taxpayers. The higher the income, the higher the chances people have to receive a tax examination. IRS agents audited 5.8% of citizens that earned a minimum of $1 million in income.
Image source: 1
