With the deadline for filing federal tax returns now mere hours away, the focus regarding taxes is largely free to shift to other concerns. Indeed, in the weeks and months ahead, many taxpayers — who may or may not have taken certain liberties with their returns — may fear receiving a letter from the Internal Revenue Service indicating that they are going to be audited.
This naturally begs the question as to whether these fears of a potential audit are valid or otherwise overblown.
According to experts, the simple truth is that the risk of the IRS auditing a person’s tax return has diminished considerably in recent years due to major budget cuts.
To illustrate, consider that in 2010, the agency conducted over 1.2 million taxpayer audits, which equates to a little over 1 percent of individual returns. However, just five years later, the agency conducted 350,000 fewer audits. To put this in perspective, consider that this was a 22 percent drop from 2010 and the lowest number of audits in 10 years.
In light of this trend and the fact that the current IRS budget is roughly $900 million lower in 2016 than it was five years earlier, experts indicate that the chances of an individual being audited over the next 12 months are relatively low.
It’s worth noting that while people might greet this news with delight, the IRS indicates that the slashing of its funds has actually served to slash funds from federal coffers.
Indeed, the IRS Commissioner has indicated that the staffing shortages precipitated by the budget shortfall is resulting in nearly $6 billion per year in money owed going uncollected.
It will be interesting to see if numbers like these cause Congress to reconsider its position.
In the meantime, if you have been notified of an impending audit by the IRS, it’s important not to panic. That’s because a skilled legal professional can guide you through the entire process, enforcing your rights and protecting your best interests.