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Tax day: Chances to get audited by IRS lowest in decades

Published time: April 14, 2014 17:52
Reuters / Shannon Stapleton

Reuters / Shannon Stapleton

Due to falling budgets and increased obligations, Americans filing their taxes are less likely to be audited by the Internal Revenue Service this year than they have been in nearly a decade.

According to the Associated Press, this has resulted in the agency fielding the fewest number of auditors since the 1980. While advancing technology is helping the IRS adapt in some ways, its inability to employ as many agents means not only will revenue collection suffer, but also that Americans looking for help with their tax forms may not be able to get assistance.

In 2013, less than one percent of all 146 million individual tax returns were audited by the agency, though the likelihood of being subjected to the procedure increased for the wealthy and for those claiming significant tax deductions relative to their stated income.

"We keep going after the people who look like the worst of the bad guys," IRS Commissioner John Koskinen said to the AP. "But there are going to be some people that we should catch, either in terms of collecting the revenue from them or prosecuting them, that we're not going to catch."

According to the Wall Street Journal, individuals earning $1 million or more have a nearly 11 percent chance of being audited – almost 5 percent higher than back in 2009, but still the lowest percentage since 2010. Those earning under $200,000, however, have only a .88 percent chance of earning IRS scrutiny.

Speaking with the AP, former IRS lawyer Elizabeth Maresca said that company employees and those who aren’t wealthy simply don’t have much of a chance to cheat on their taxes.

"Anybody who's an employee, who gets paid by an employer, has a limited ability to take risks on their tax returns," she said. "I think people who own their own business or are self-employed have a much greater opportunity (to cheat), and I think the IRS knows that, too."

As for the IRS itself, although Koskinen said it could collect far more revenue with greater manpower, chances of that happening are slim. President Obama has proposed a 10 percent increase to the agency’s budget, but Republicans have resisted in light of scandals and the fact that the IRS must help implement the Affordable Care Act – namely the individual mandate.

The agency was also accused of improperly scrutinizing conservative-leaning political groups between 2010 and 2012, sparking a series of investigations into the matter. Since 2010, the IRS budget has dropped by almost a billion dollars, from $12.1 billion to $11.3 billion.

Koskinen also said that he thinks some politicians may be under the impression that by lowering funds, the IRS will choose not to implement the ACA. Since the agency is legally obligated to do so, however, that is simply not a possibility. Instead, the IRS will have to choose between enforcement, taxpayer services, and technology.

According to Obama’s budget proposal, every $1 increase in the IRS’ budget would result in $6 in additional revenue collection.

"I say that and everybody [in Congress] shrugs and goes on about their business," Koskinen told the AP. "I have not figured out either philosophically or psychologically why nobody seems to care whether we collect the revenue or not."