Randolph Law Firm, P.C.

Fewer tax audits possible due to IRS budget cuts and staff changes

Las Vegas residents may be able to breathe a slight sigh of relief this year as the possibility of a tax audit may be lower due to staffing issues within the IRS. The IRS is currently dealing with several issues including budget cuts, a hiring freeze, reduced staff and higher incidents of tax refund identity fraud. This is in addition to responding to the needs of a tax-paying public. Although the possibility of being chosen for a tax audit has risen in the past several years, the number performed has remained steady across 2010 and 2011 at 1.1 percent.

With the numbers as they are today, about one out of every 90 filers would be audited by the IRS. However, wealthy filers are more likely to face IRS audits. With tax season upon us, the IRS Deputy Commissioner said it is possible that tax audits may actually drop this year due to the agency reassigning workers to deal with tax refund fraud and identity theft cases.

With the IRS trying to balance its duties in addition to also dealing with fewer resources, they are in for a more difficult time as they attempt to deal with the sheer number of tax returns coming their way while still serving as a resource to the public. Last fiscal year, the IRS processed over 234 million tax returns, which brought in over $2.4 trillion. However, there is a big difference between what taxpayers may owe over a year's time versus what may not be paid because of filing errors or even fraud. The difference, the IRS estimates, equals approximately $385 billion.

With IRS budget cuts, attempting to keep an eye on fraudulent activity and also having to deal with an increasingly complex tax code, the IRS has its hands full. Because of those reasons, the possibility of a tax audit may slightly drop this year. With the later tax deadline date this year, it seems Las Vegas residents and the rest of America may be able to deal with tax season a little bit more easily.

Source: Tucson Citizen, "Tax audits may dip because of staff shifts," Kevin McCoy, April 11, 2012

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