The Internal Revenue Service,
which has lost 30% of its enforcement staffing since 2010, audited 0.7% of tax
returns in fiscal year ended Sept. 30.
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
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.
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