IRS Audit Targets Deemed Irresponsible

Back in 2020, former Treasury Secretary Steven Munchin sent out a new directive to the IRS. It required them to audit 8% of all personal income tax returns filed that were in excess of $10M every year.

In order to hit that quota, the Service had to lower its auditing standards. In other words, they had to change how they chose who was being audited.

To get to the 8% level, they began auditing returns that didn’t have irregularities.

The Treasury Inspector General for Tax Administration (TIGTA) just released a report that reviewed the results of this change. TIGTA found that the efficiency of the audits dropped by 93%.

That means that for every hour spent auditing, the IRS received 93% less in revenues than when the IRS just chose returns that had a higher number of mistakes. no matter the income level. The Treasury Department ended this directive and went back to choosing audit targets in the older manner last year.

The problem is that the harm has been done. Our government depends on the IRS to collect its taxes and the lack of revenue that resulted is an obvious problem.

Let me leave you with this…

Choosing audit targets is a political nightmare. Lawmakers want to collect revenue, but don’t want to offend voters in the process.

The new administration has always focused on higher earners for all of their tax law changes. They want to raise taxes on these individuals and seem to assume that they are nothing but tax cheats.

The problem is that most of these people have accountants like me working for them. How much are they going to actually receive if someone like me is doing that return?

From a political standpoint, this assumption might work well with a poorer tax base. It sounds great on national newcasts, but it doesn’t do anything to help America pay its bills. And in choosing these targets, they’ve aggravated the highest earners in the country; the ones that actually have the money necessary to fund their campaigns.

Supposedly they are no longer auditing based on income levels only. Hopefully this national experiment has ended, and we can all get back to business as usual.

We’re all going to get through this. Let’s get through it together.

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Chris Amundson

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