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Ask The California Employment Tax And Payroll Tax Attorney – IRS Audit Rates Continue To Fall – What’S The Story?

By Robert S. Schriebman

2022

Introduction
The Government Accountability Office (GAO) is the fiscal watchdog of the federal government. It recently conducted an analysis covering a 10-year period on the rate of audits for individual taxpayers with annual incomes marked at $200,000. The GAO analyzed the audit rates for individuals with incomes above and below $200,000 (GAO-22-10496, May 18, 2022).

What the GAO Report Found

High Income Taxpayers
The periods under examination covered the years 2010 – 2019. There was a marked decrease of audits for individuals with incomes of $200,000 and above. These audits are complex and time consuming. Although the audits involved fewer taxpayers, those taxpayers audited during the test period, were audited repeatedly when compared to individuals with income under $200,000.

Lower Income Taxpayers
The periods under examination covered the years 2010 – 2021. These audits generally involved fewer complex issues and less auditor time per examination. However, relatively speaking, this group paid a higher percentage of taxes that those earning more than $200,000.

The GAO Report did not discuss the percentage of taxpayers audited. Having said this, the trend over the last several years has seen a smaller percentage of taxpayers audited across the board. This is especially true with corporate taxpayers especially large corporations. This is due primarily to the decrease in the number of auditors. The Commissioner continues to ask Congress for more funds to hire more people.

I am repeatedly asked by clients what the percentage or odds of being audited are when they do tax planning or when they take a certain position when filing their tax returns. My advice has always been the same: Even with a decreasing audit rate, if the IRS or FTB chooses your return for an audit, the odds are 100%.

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Robert Schriebman has a successful practice in the Rolling Hills Estates area of Los Angeles County serving clients throughout California and the United States. He has successfully dedicated more than 50 years to helping individual taxpayers, business owners, CPAs, Enrolled Agents, and tax attorneys navigate the complicated tax systems of the federal and state governments.  Mr. Schriebman is in private practice.  He is not affiliated in any way with the EDD and he is not employed by the EDD or any other agency of the State of California.

Robert Schriebman has written the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.

Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House.

Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House in addition to the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.

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