Data Shows Number Of Low-Income Audits Could Triple As IRS Grows

The IRS audited 197 low-income families for every high-wealth family in 2019, according to the Government Accountability Office (GAO)—a number that some experts expected to climb under an IRS turbocharged with more money and manpower.

Over the next decade, the Democrat’s new “Inflation Reduction Act” will provide the IRS with 87,000 new agents and $80 billion in funding, with nearly $46 billion earmarked for enforcement.

According to the Congressional Budget Office, the tax and spend bill is projected to bring in $203.7 billion in revenue from 2022 to 2031.

President Joe Biden’s administration has promised no new taxes or audits on households making less than $400,000 per year.

But experts say that promise may be hard to keep.

A previous CBO analysis using a similar funding plan featured in the Inflation Reduction Act found audit rates would be restored to levels around 10 years ago. The analysis showed the audit rates would rise for all taxpayers, but the ones with higher incomes would face the biggest increase.

The oldest data available in the 2022 Government Accountability Office report released this year was for 2010. That’s when the IRS was better funded and staffed with some 95,000 full time employees.

From 2010-2019, the IRS audited 0.9 percent across all income groups compared to 0.25 percent now.

Rachel Greszler, a budget and entitlements senior research fellow at the Heritage Foundation, told The Epoch Times that even returning to the 2010 audit levels for those making more than $400,000 per year, would still fall short of the IRS’s revenue goal.

“My rough estimate shows that returning to the 2010 audit levels for all income groups would only generate a little over 20 percent of the bills’ estimated enforcement revenues in 2031,” she said.

In her commentary on the Heritage Foundation’s website Aug. 12, Greszler wrote the numbers don’t add up using 2019 data either without the lower- and middle-class.

Even increasing recent audit rates 30-fold for taxpayers making over $400,000—including 100 percent audit rates on taxpayers with incomes over $10 million—still would fall more than 20 percent short of raising the estimated $35.3 billion in new revenues by 2031, she wrote.

So it stands to reason that taxpayers can expect audit rates more like those about a decade ago.

GAO statistics show a larger number of audits in 2010 for taxpayers in the $0-$24,999 tax bracket than the high wealth households. About 579,000 audits were performed on the lowest tax bracket in 2010, compared to 197,000 in 2019.

Yet for the wealthy, high wealth audits of $10 million or more stood at 2,800 in 2010, dipping to 1,000 in 2019.

While a higher percentage of high wealthy households is audited more than poor ones, the lower class sees more audits overall.

A better-funded IRS in 2010 audited the poor much more aggressively than the super wealthy—at a rate of 207 to 1.

In recent years, the IRS audited taxpayers with incomes below $25,000 and those with incomes of $500,000 or more at higher-than-average rates. But, audit rates have dropped for all income levels—with audit rates falling the most for taxpayers with incomes of $200,000 or more, according to the GAO report.

The Inflation Reduction Act, which is a scaled-down version of Build Back Better negotiated by Democrats Sen. Chuck Schumer (D-N.Y.) and Sen. Joe Manchin (D-W.Va.), took Republicans by surprise. The measure passed the Democratic-controlled Senate and Congress last week through a reconciliation process.

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