Afraid of an IRS audit? Here's one reason to chill
It's tax season again, and if you're like many Americans you may have experienced a twinge of anxiety at the thought of getting audited while adding up your deductions and angling for the biggest possible refund.
Rest easy. New data from the Internal Revenue Service show the chance of an individual taxpayer being audited fell to its lowest level in more than 10 years in fiscal 2015 (which ended Sept. 30), as the tax agency coped with staffing declines. Non-profit organization and large corporations, those with at least $10 million in assets, saw similar drops in their rates of audits.
Though that may seem cheery news for taxpayers, IRS revenue derived from audits fell to its lowest level in 13 years to $7.3 billion. What's more, the agency projects its workforce shortage will result in even less audit revenue being collected in the years ahead, affecting the federal budget.
IRS Commissioner John Koskinen says his agency has the lowest level of staffing it's seen in 20 years, a problem that's directly related to budget cuts.
Since 2010, the IRS has seen its budget cut by 18 percent, resulting in 13,000 fewer employees and a drop of nearly 10,000 fewer enforcement staff, according to analysis last fall from the Center on Budget and Policy Priorities.
Such cuts have made it nearly impossible for many taxpayers to reach the agency with questions. Fewer than half of the calls placed to the IRS were answered in fiscal 2015, and callers who did get through waited on hold for an average 23 minutes, CBPP said.
Staffing was so low at the IRS that there was a less than 1 percent chance that a tax return would be checked for accuracy, Koskinen told the American Institute of Certified Public Accountants in November.
Beating up on the IRS has become a rite of passage for many politicians, including Republican presidential contender Ted Cruz, who said he wants to abolish the agency.
Cuts to the IRS budget worsened following the 2012 elections, after what became known as the IRS targeting scandal that led many, especially in conservative circles, to believe that the agency targeted many tax-exempt applicants based on their political views.
The cuts have left Congress in the position of appearing to cut off its nose to spite its face, seeing as the IRS is charged with collecting the very money the lawmakers take pains to allocate to the federal budget each year.
Indeed, cracking down on fraud is lucrative for the government. Every additional $1 spent on IRS enforcement yields $6 of additional revenue from collecting taxes owed, according to the Treasury Department.
For its part, the IRS is hoping to convince Congress of the need for increased funding. In its latest budget proposal, it outlines more than $90 million to hire 699 full-time staffers to handle more than 30,000 more collection cases.
Still, the request appears to have fallen on deaf ears. During congressional testimony last month, lawmakers quizzed Koskinen about IRS projections, but were noncommittal on requests for additional budget hikes.