The New York Times analysis shows that the IRS audit rate in the decade is lower than most taxpayers' lives than most taxpayers' lives, and audits will almost certainly become more sparse if the Trump administration follows plans to cut the agency's workforce.
The latest IRS data shows that the audit rate for individual taxpayers has dropped by about two-thirds since 2010.
The exact comparison of audit rates is challenging because the IRS has changed its definition over time. However, an era analysis of historical IRS data found that the effective audit rate between 2020 and 2023 was less than 0.5%, lower than the audit rate published since at least 1950.
In 1980, the agency issued an audit rate of more than 2%, and in 1960, it exceeded 3%.
In the 2010s, audit rates for all income levels fell to the bottom. For most Americans, the audit could be 100 games at the beginning of the decade. By the end of the decade, it was even less likely.
For families with high incomes, the audit rate is also much lower than before. (The IRS also reviewed companies and partnerships, and its data also showed a significant drop in these audits.)
Lower audit rates have led to a decrease in government revenue. The agency collected approximately $11 billion in additional revenue through a personal income audit of earnings in 2010. The recent tax year is still processing a large portion of the audit, but the additional revenue trend is declining. So far, the agency has collected only $4.5 billion in revenue in the 2019 tax year.
According to people familiar with the matter, the Trump administration is currently cutting about 25% of its layoffs against the IRS workforce, although they warn that the scale of potential cuts is changing. The agency had about 100,000 employees in January, and this year the government discussed cutting 18% to 50% of people.
Bryan Camp, a professor at the Texas Tech School of Law, who previously worked for the IRS, said the reduction in staff will inevitably lead to fewer audits. He said that the decline in audits over the past decade has been largely due to losses from IRS workers. The agency reduced its head count by about 20% from 2010 to 2020.
Congressional Republicans successfully cut IRS president Joseph R. Biden Jr. in the 2010s.
The goal is to increase IRS execution spending by about $45 billion, with a view to increasing revenue by about $125 billion over the same period.
It is not clear whether Biden's planned revenue will increase. The Congressional Budget Office estimated that at the time, it would take 30 months for the IRS to collect additional income from new workers due to training time and average audit time. By 30 months passed, President Trump returned to office. Subsequently, Congressional Republicans have revoked or frozen additional IRS enforcement funds.
Mr. Trump has long been arguing with officials over his tax compliance. As a candidate for 2016, he said he had been audited for years and thought it was “very unfair.” The Trump Organization was convicted of tax fraud in 2022, and a 2018 New York Times investigation found that Trump participated in a tax program that included instances of fraud in the 1990s.
The Trump administration fired 7,000 IRS probation employees this year. (They were rehired after the court order and in some cases they have been asked to return to work.) The agency lost 5,000 employees who chose to take the offer.
If the Trump administration reduces the IRS staffing level by 50%, former Biden Treasury official Natasha Sarin (now president of Yale’s Budget Laboratory) estimates a loss of $350 billion to $2.4 trillion in revenue over a decade.
Although the lab published estimates cover a wide range, she said it was clear that funding was provided to the IRS for itself. “Every estimate has some meaning, that every dollar offered to the IRS generates X dollars over time,” she said. “The productivity of these dollars is exactly the subject of a fierce academic debate.”
Even Elon Musk, who leads Mr. Trump’s efforts to cut costs, said he is working to narrow the deficit.
But Republicans say audits are equivalent to harassing taxpayers. Taxpayer House Committee Chairman Jason Smith said in a statement shortly after Trump’s inauguration that the president’s attitude with the IRS will help “middle-class Americans and small businesses, living in fear.”
White House spokeswoman Liz Huston did not answer specific questions about the IRS staffing level or audit rate, but said in a statement: “President Trump made it clear that he is committed to making the federal government more effective without compromising on mission-critical actions. There will be no disruption to the service.” The IRS did not respond to a request for comment.
David Hasen, a professor at the University of Florida School of Law, said there are other reasons since the audit rate, besides the IRS staffing level. One of them is that Congress has handed over many time-consuming administrative positions to the IRS
“It is required that the IRS do more and more,” he said. “The Affordable Care Act involves other IRS programs, such as the child tax credit, as well. It gets involved in resources.”
Who will review it?
The Biden administration said its goal is to increase audit rates only for high-income earners, partnerships and companies. Danny Werfel, the IRS's then-commissioned commissioner, promised that the agency would ensure that “audit rate does not increase people with less than $400,000 per year.”
There is a political logic to focus audits on high-income earners, but it also makes sense from a strict return on investment perspective. The average audit hour for face-to-face audits for 0.1% of the highest earners is twice as high as the average audit, but the potential additional tax revenue is many times higher.
Audits also bring financial benefits to the government, in addition to the immediate tax collection, preventing taxpayers from avoiding the rules in the coming years.
Ben Sprung-Keyser, an assistant professor at the University of Pennsylvania Wharton School, is part of a researcher who studies the long-term consequences of audits. They found that taxpayers who were randomly audited and owed additional money even after ten years, even in future tax returns compared to those who were not randomly audited.
In the following years, “the results of these audits were about three times the original revenue collected during the audit itself.”
Low-income and high-income earners have similar deterrence, accounting for a percentage of tax payments, but the total tax amount for high-income applicants is much larger.
Monte Jackel, a tax attorney representing companies and the wealthy, said advanced taxpayers and their attorneys are aware of the enforcement trend when submitting returns.
“For clients, you can't take the audit rate into consideration in your opinion,” Jackel said. “But in reality, it’s always in the backstage.”
When the review was less, he said: “The news came.”
Andrew Duehren Contribution report.
