The only thing worse than paying taxes to the United States government is being audited by that same federal government.
But don’t you worry: your odds of facing a tax audit by the Internal Revenue Service (IRS) are lower this year.
Last year, the number of people audited by the IRS declined for the sixth consecutive year to a little more than one million. The last time so few Americans were audited by the tax-collecting agency was in 2004, a time when George W. Bush was battling for re-election, Twitter was not a household name and the Boston Red Sox finally won a World Series.
In 2016, only 0.7 percent of individuals were audited by mail or in person. However, the more money you earn the more likely you will be audited. Last year, 1.7 percent of audited tax returns were with incomes of more than $200,000, and 5.8 percent of audited returns were with incomes more than $1 million.
Why are you likely not going to be audited? The IRS cites budget cuts as the reason fewer individuals are facing audits. The organization’s budget was slashed from $12.2 billion in 2010 to $11.2 billion in 2016. In the last six years, the IRS has lost approximately 17,000 workers, which includes roughly 7,000 enforcement agents.
John Koskinen, IRS Commissioner, claims that the federal government is losing between $4 billion and $8 billion every year in uncollected taxes because of the budget cuts.
“We are the only agency if you give us more people and money, we give you more money back,” Koskinen told CNBC, adding that it is still unwise to cheat on your taxes.
“If you’re a taxpayer, you don’t want to roll the roulette wheel and have the little white ball land on your number because then we’re not very happy.”
If you are losing sleep because you are concerned about having a visit from the leeches, er, IRS agents then you can be rest assured that it is improbably that it will happen.