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IRS Audit Rates Increase Substantially as Income Rises

October 23, 2020

On Tuesday, October 20, IRS Deputy Commissioner for Services and Enforcement Sunita Lough shared a blogpost showing that, despite misleading claims from Democrats, IRS audit rates are higher for wealthy taxpayers than lower-income workers.

There are several important takeaways from her post, but Lough’s point is simple: “the reality is that the audit rate grows as income increases.”

  • According to the most recently finalized audit data, taxpayers with an income of $10 million or more were audited at a rate of 8.16%.
  • Additionally, taxpayers making between $1 million and $10 million were audited at a rate of 2.53% in that same period.
  • By contrast, only 1.2% of the 25 million EITC’s processed were audited.

The IRS also highlights the positive aspects of the EITC program. More than 25 million people claim the EITC each year. This generates more than $63 billion for workers and families in need.

But at the same time, it is important to recognize that error rates on EITC returns remain as high as 50%, and improper EITC payments total $17 billion per year.

As a reminder of their goals, Lough summarizes the IRS’s job succinctly in concluding—saying: “IRS strives to properly serve compliant taxpayers and uphold the nation’s tax laws. . .guided by fair and impartial audit plans throughout the process.”

The full post is available on the IRS’s “A Closer Look” blog, which you can access here.

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