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Audit rates are dropping across the nation

On Behalf of | May 26, 2022 | Tax Debt |

The total number of audits performed on an annual basis by the IRS continues to drop. This is as true in the state of Washington as it is in the rest of the nation. While this may be good news for taxpayers, it may also come with a caveat. The number of audits affecting the 1% has dropped by the highest margin.

Richer Americans are less likely to be audited

Recent studies conducted by independent taxation watchdogs seem to suggest that the richer you are, the less likely you are to be affected by routine tax law.

The issue is being framed in predictably different ways by members of opposing political parties. Many Democrats fear that this new state of affairs sets the stage for the imposition of a favorable tax law for rich people. Meanwhile, they worry that a whole other set of rules is being set in stone for the less wealthy. On the other hand, Republicans applaud the trending drop in audits.

Audit rates have dropped across all incomes

The most that can be said at the moment is that the chances of being audited by the IRS have dropped across all income levels. This does not necessarily mean that the process of auditing has become more fair or evenly applied. As noted above, the top 1% of earners in the U.S. have been disproportionately favored.

As of 2019, people who made up to $25,000 faced a much greater possibility of being audited. The rate for this level of income was 0.40%. Meanwhile, the rate for households reporting an income of $25,000 to $500,000 was listed at a much lower rate of 0.17%. The discrepancy between the figures has not gone unnoticed.

The IRS has responded to the outcry by introducing a new set of measures that are designed to scale taxation from the very top. However, this does little to address the apparent inequality that continues to be the norm at present. Whether the new measures adopted by the agency can manage to offer a workable solution remains to be seen.