It’s the time of the year when our inboxes start filling with W-2s, 1095-Cs, maybe a MISC or two. In other words, it’s tax season. Doing your taxes is at best a chore, and at worst, a source of dread, because there’s a chance your tax return will be audited. But the threat of an audit isn’t quite what it used to be, according to new data from the IRS. The report says that the rate of individual audits has declined for the eighth straight year. Only 0.45% of individual tax returns were audited for 2019.
“That’s less than half of what the rate was about 10 years ago,” says Richard Rubin, a tax reporter for The Wall Street Journal. “And that’s really a function of the fact that the IRS’ budget has been cut. It’s a smaller agency than it used to be.”
Rubin says the budget cuts are forcing the agency to allocate less money to enforcement, which is causing “hundreds of billions of dollars” to go uncollected every year.
“There’s a pretty clear consensus [among experts] that every additional dollar spent on enforcement, at least in the short run, can yield another four dollars, at least, in revenue,” Rubin says. “There’s absolutely money being left on the table right now by underfunding and underenforcing the tax code.”
Written by Morgan Kuehler.