While many Maryland taxpayers fear audits, the Internal Revenue Service is actually checking up on fewer people. The shrinking number of tax audits has been highlighted by news coverage of allegations that President Donald Trump and his family members failed to pay hundreds of millions of dollars in taxes. In 2017, only one out of every 160 tax returns were audited, marking 0.6 percent of 245 million returns. For six years, the number of audits has declined annually, and it has now reached its lowest level in 15 years.
In 2017, 934,000 returns were audited, the lowest absolute number since 2003. At the same time, the number of taxpayers has risen. In addition, wealthy Americans are specifically less likely to face audits. Just over 4 percent of households with over $1 million in income were audited in 2017. In 2015, 9.5 percent of those returns were audited. The 2017 number marks the lowest audit rate for people making over $1 million annually since the IRS began tracking that figure in 2004.
There are a number of reasons for these changes, but the most commonly cited is a decline in funding to the Internal Revenue Service. The agency’s budget has been cut on multiple occasions since 2011. In absolute numbers, it is almost $1 billion less in 2017 than it was in 2011. During that time, nearly one-third of its enforcement employees left their jobs.
However, despite the decrease in tax audits, they still continue to be a concern. Both high earners and people with income below $25,000 could face scrutiny. Someone who is facing an IRS audit can work with a tax law attorney to mount a defense.