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IRS Audits Plunge as Agency Budget Plummets

February 25, 2015

Last year, IRS chief John Koskinen warned about the impact of his agency's shriveling budget. "I have not figured out either philosophically or psychologically," he lamented, "why nobody seems to care whether we collect the revenue or not." That was before Congressional Republicans slashed its funding for the fifth straight year. Now, one year after the numbers of Internal Revenue Service agents examining returns fell to levels not seen since the 1980's, the audit rate for individuals has plunged to its lowest in a decade.

That's the word from USA Today, which documented at growing crisis at IRS in the wake of the GOP's second gutting of the agency in as many decades.

The audit rate, the percentage of individuals' tax returns IRS revenue agents examined either in person or via correspondence, fell to 0.86% last year, the data show. That represents the lowest rate since at least fiscal year 2005.
After rising steadily from 2005-10, the number of IRS audits for individual taxpayers fell 21.4% during the succeeding five years, the data show.
The IRS audited slightly more than 1.2 million individuals last year, down more than 162,000 from 2013, and a drop of nearly 339,000 from 2010.
Audits fell in virtually every individual category and across income levels, even as the number of individual tax returns filed rose in all but two of the past nine years, the data show.

The diminishing ability of Uncle Sam's tax collector to enforce the law is just the latest entirely predictable symptom of the GOP's devastating cuts. In 2014, only 53 percent of taxpayers calling the agency for help were projected to even get through, while wait times were forecast to grow to 34 minutes. This year, National Taxpayer Advocate Nina Olson warned, "the IRS may end up answering as few as 43 percent of the telephone calls it gets." After warning in December that his skeletal budget would lead to worker furloughs and delayed refunds, Koskinen announced last month that due to budget cuts, people who file paper tax returns could wait an extra week for their refund -- "or possibly longer."

Of course, the ultimate result of the GOP's crusade against the IRS is that revenue collected by the U.S. Treasury will necessarily go down and annual budget deficits go up. With estimates that each dollar of additional funding for the IRS brings in between six and 10 dollars in extra collections, it's no wonder Jonathan Chait aptly labeled the Republicans the "the pro-deficits, pro-tax evasion party." Or, as Ezra Klein put it five years ago:

Converting dollar bills into $10 bills is an excellent way to pay off your credit card. Except, it seems, if you're a House Republican.

But for now, Republicans accusing the IRS of "partisan witch hunts" show no sign of restoring funding for an agency whose budget is now below 2008 levels. In the meantime, Olson warned, "Unless we are able to correct this, very bad things will happen to taxpayers."


Jon Perr
Jon Perr is a technology marketing consultant and product strategist who writes about American politics and public policy.

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