A taxpayer in the low-income bracket is nearly 5 times more likely to undergo an audit by the IRS than a member of the top or higher income bracket, according to research that analyzed the data from tax audits performed in 2022 by the IRS.
This results in the lowest level of service being provided to taxpayers who have the greatest need for assistance, as stated by the National Taxes Advocate Erin M. Collins in reference to the report during yearly report to Congress. "The IRS correspondence auditing is framed to expend the smallest amount of resources to undertake the largest number of examinations," Ms. Collins said.
The Transactional Records Access Clearinghouse (TRAC) at Syracuse University reviews the internal IRS management reports on a monthly basis, and while doing so, the organization discovered some distinct tendencies in the data from the year 2022. The most important thing that the committee did was look into audits, especially given how much the government agency relied on letters that were prepared mechanically and sent out to taxpayers.
According to the statistics, 85 percent of the Internal Revenue Service's audits were done via the use of these letters, which seek more information and documents relating to certain topics of interest. Out of the 164 million income tax returns that were submitted the previous year, the total number of audits declined from 659,003 in FY 2021 to 626,204 in FY 2022.
The percentage of income tax audits for those who were lowest income group was 12.7 per 1,000, while the rate of audits for people in the highest income bracket was just 2.3 per 1,000. This represents a roughly five-fold increase in the audit rate. There was a one in 1.1 chance that a millionaire would be subject to an audit.
This almost mirrored comparable rates – 13 per 1,000 and 2.6 per 1,000, respectively – during FY 2021; nevertheless, that percentage nearly quadrupled from FY 2020, when the lowest income band witnessed 7.9 audits per 1,000 individuals.
According to the TRAC report, the lack of attention to millionaires was the result of "severe budget austerity cuts over the years," which forced the Tax man to shift its focus to "easy targets in an era when IRS progressively relies upon correspondence auditing process yet doesn't have the reserves to assist taxpayers or respond to their questions." This caused the IRS to change its focus to "easy targets in an era when IRS more and more relies upon correspondence audits," which forced the IRS to concentrate its efforts on "easy marks in an era
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