IRS Audit Rates Continue to Decline to Under 1%

The Internal Revenue Service’s audit rate went down again in 2018, according to data released by the IRS recently.

The IRS Data Book for 2018 showed that compared to 2017, there were fewer audits during fiscal year 2018, from October 1, 2017 to September 30, 2018. The IRS audited more than 892,000 individual income tax returns during the fiscal year, down slightly from the previous year. The IRS audited 0.6 percent of all individual tax returns filed in calendar year 2017, and 0.9 percent of corporate income tax returns, not counting S corporation tax returns. Of the majority of fiscal year 2018 audits, 74.8 percent, were conducted by correspondence. The other 25.2 percent were conducted in the field. Of the nearly 1 million examinations of tax returns, more than 22,000 taxpayers didn’t agree with the IRS examiner’s determination, totaling an unagreed recommended additional tax of almost $10.2 billion

On the other hand, of the nearly 1 million examinations of tax returns, almost 30,000 resulted in additional refunds to the taxpayer, totaling more than $6 billion. The IRS also examined 15,562 tax-exempt organization, employee retirement plan, government entity, tax-exempt bond, and related taxable returns in fiscal 2018.

The IRS Data Book also includes information on a wide array of other subjects, such as tax returns, refunds, examinations and appeals.  Included this year is a section on taxpayer attitudes from a long-running opinion survey. The survey indicated that most taxpayers continued to agree it’s not at all acceptable to cheat on their income taxes. This attitude has remained within a four-point range since 2009. Most taxpayers are still satisfied with their personal interactions with the IRS. Nearly half of the taxpayers who responded to the survey last year agreed that service and enforcement are properly balanced.

Over the course of the fiscal year, the IRS collected nearly $3.5 trillion, processed more than 250 million tax returns and other forms, and issued over 120 million individual income tax refunds totaling almost $395 billion.