IRS Audit Rates Down

     Nobody loves the IRS it seems. Poor folks over there ask, but do not receive. The stats show that money used to fund IRS activities is a solid investment returning a bunch of otherwise hidden dollars to the US treasury. But alas, ours is a political system and congress must answer to the public and to the private interests that butter its bread so…IRS will have its budget cut again and in some cases  to what it was in 2008. So while being asked to do more it will get fewer dollars to do it with. The added burden of policing the health care penalties will be a challenge. A five percent reduction in enforcement in the budget will result in a further drop in audits across the board and will bring the average audit rate to below 1% again. Lawyers who practice before IRS, moi included, will still be holding forever on calls and seeking agents who are working fewer hours. Matters will be more dicey as real questions about health care penalties hit the IRS which will be less than prepared for them. How is IRS dealing with a shrinking budget? The answer is to make tax preparers deputy agents. By leaning on them they get at the source of some filing and return issues. Creating new penalties and monitoring the preparers lets the IRS save budget dollars and still get some of the job done. Fraudulent claims on returns for earned income credit contribute as the #2 ranking source for improper payments made the government. The total of these improper payments amounts to a whopping $105.8 billion. That fact alone would seem to argue for increased IRS enforcement activity and a bigger budget.