Management of the Internal Revenue Service (IRS) is one of the main battlegrounds between the Biden administration and the new Republican majority in the House of Representatives. While the government is working to strengthen the tax agent inspection service, the Republican Party succeeded in repealing funding for the IRS.
Rather than pursuing potential tax fraud of millionaire earners, the IRS focuses its efforts on the citizens with the lowest incomes. A study of IRS tax audit data for last year revealed that a low-income taxpayer is five times more likely to undergo a tax audit than a millionaire.
The taxpayer class with unbelievably high audit rates – five and a half times virtually everyone else – were low-income wage-earners taking the earned income tax credit.
Data reflected in the Transactional Records Access Clearinghouse (TRAC) at Syracuse University showed that the IRS conducted 85% of its audits through letters requesting additional information and documentation from taxpayers whose tax returns have come to the agency's attention. The audit rate for those in the lowest income bracket was12.7 per 1,000, compared to 2.3 per 1,000 for those in the highest income bracket.
The odds of a millionaire facing an audit dropped to just 1.1% in 2022.
A new report released by the Transactional Records Access Clearinghouse at Syracuse University found that a millionaire's chances of coming face-to-face with an auditor fell in 2022 to just 1.1%. https://t.co/AxAUVAmRk9
— CBS News (@CBSNews) January 5, 2023
The TRAC report notes that the lack of attention to millionaires is due to "severe budget cuts over the years" that forced the IRS to change its approach to the audits it conducts. These cuts, however, did not relax the fiscal pressure on low-income Americans.
