When Georgia residents file their taxes, they may be concerned about the threat of an audit by the Internal Revenue Service. The thought of an auditor going through receipts, paperwork and pay stubs can be enough to make any taxpayer nervous. However, statistics show that tax audits are less likely than they have been in years. The budget of the IRS has been cut repeatedly since 2011; at that time, it had a budget of $12.1 billion annually. In 2017, that figure was down to $11.2 billion. During the intervening years, the agency lost one-third of its personnel dedicated to enforcement.
In 2017, the IRS processed 245 million tax returns, selecting 0.6 percent, or 934,000 returns, for audits. This is the sixth year in a row that audits have declined. Furthermore, they have reached their lowest level since 2003. In addition, wealthy Americans are also less likely to be audited. In 2015, 9.5 percent of returns citing household income of over $1 million each year were audited. That rate fell to 4.3 percent last year. The 2017 rate of millionaire audits was the lowest reported since the agency began tracking the figure in 2004.
However, filers who make $1 million or more are more likely to face an audit than the average American. Those making $200,000 or less each year were only 0.6 percent likely to be audited after filing their tax returns in 2017. But self-employed filers were more likely to face audits. People reporting no income at all were also more likely to be scrutinized — 3.3 percent of these individuals were audited.
Despite the lowered frequency of tax audits, the Internal Revenue Service can impose a significant burden on a person or business as well as the fear of real penalties. A tax law attorney can help someone defend themselves in case of an IRS audit.