IRS Audits of Individuals Drop for Fifth Straight Year -- Update
February 22 2017 - 4:45PM
Dow Jones News
By Richard Rubin
WASHINGTON -- U.S. tax audits of individuals declined for the
fifth straight year in 2016 to reach the lowest level since 2003,
showing the effects of budget cuts at the Internal Revenue
Service.
The IRS, which has lost 30% of its enforcement staffing since
the 2010 peak, audited 0.7% of tax returns in the fiscal year that
ended Sept. 30, according to preliminary data released Wednesday.
That means the IRS audited roughly 1 in every 143 individual tax
returns, down from 1 in 90 back in 2010.
Audits declined even for the high-income households that have
been an enforcement priority for the IRS. In 2016, the agency
audited 5.83% of returns with income over $1 million, down from
9.55% in 2015 and marking the lowest audit rate for that income
group since 2008.
Business audits also dropped in 2016. Overall, the IRS audited
0.49% of business tax returns, the lowest level since 2004. The IRS
audited 6,453 large corporations, those with assets exceeding $10
million. Four years earlier, the agency audited more than
10,000.
Republicans in Congress have been steadily freezing and cutting
the agency's budget, both as part of broader spending cuts and in
an attempt to punish the tax agency for its treatment of tea-party
groups seeking nonprofit status.
Treasury Secretary Steven Mnuchin said during his recent
confirmation hearing that he was concerned about the decline in IRS
resources and that he thought he could make a return-on-investment
case to President Donald Trump. The IRS has said in the past that
it could generate about $4 to $6 in tax revenue for every
additional dollar it receives. The Trump administration is slated
to release its first budget in March.
Write to Richard Rubin at richard.rubin@wsj.com
(END) Dow Jones Newswires
February 22, 2017 16:30 ET (21:30 GMT)
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