Through the Inflation Reduction Act, the IRS is slated to receive nearly $80 billion in agency funding over the next decade. According to the Morning Consult/Politico Poll, it was found that a majority of voters are not worried about being audited although the IRS had increased funding.
The IRS planned to have enough resources to increase audits, however, it is suspected that high-income Americans will be the targets of the reviews. According to the poll only 24% of voters are concerned about IRS audits. This means that about 1 in 4 are personally concerned about being audited.
Over the past decade audits have significantly dropped, especially those audits that target high-earners. For example, in 2010 the percentage of audits for Americans making $5 million or more went from 16% to 2% in 2019.
In a letter to the Senate dated August 4, 2022, the IRS Commissioner Charles Rettig explained that audit rates should not rise for those households that are making less than $400,000, however, large corporate and high individual earners should be careful.
According to the Morning Consult/Politico poll, roughly 48% believe that those with a higher income will be targeted the most by the IRS when it comes to audits. While 44% believe that the IRS will be going after the middle-class taxpayers instead.
But although the funds were allocated to increase IRS employees, and therefore, the number of audits, the recent budget agreement is now reducing funding for the tax agency. So although the number of audits was expected to increase, now that is in question.
If you were concerned about the potential of an audit due to more employees to be hired, now you may be able to breath a little easier knowing the full allocation of funds to the IRS is not going to happen.
Nevertheless, it is still imperative that you properly file returns and save backup documentation to prove your position in the event you are selected for a review.
