There’s good news for U.S. tax filers as Tax Day 2018 on April 17 draws near: With growing budget cuts and a subsequent cut in staff, the IRS has dramatically decreased the number of individuals it audits.
Since 2010, the IRS has lost close to one-third of its enforcement staff. During the 2010 peak in staff, approximately 1 in 90 individuals were audited by the agency, as compared to only 1 in 160 for the fiscal year that ended Sep. 30. That amounts to an audit of only 0.62% of individual tax returns.
Beside the dramatic drop in individual audits more broadly, the audit rate appears to have declined most significantly for one group in particular: high-income households. According to IRS figures obtained by WSJ, 4.37% of households with an income of $1 million or higher were audited in 2017—less than half of the 9.55% rate in 2015.
Business audit rates also dropped, from a high of 0.71% in 2012, to just 0.44% last year. While audit rates also declined for other income groups, they were not as significant.