A question and an answer

A tweet I sent out received a reply posing a question.


Here is my tweet

Here is the response with the question:

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The reality is that the probability of being subjected to an audit by the IRS rises proportionally to the level of a taxpayer's income. This is from the IRS 2020 Data Book:

Adjusted Gross Income Audit Rate
0 or negative income: 8.9%
$1- $25,000 income: 0.7%
$25,000-$50,000 income: 0.4%
$50,000-$75,000 income: 0.4%
$75,000-$100,000 income: 0.4%
$100,000-$200,000 income: 0.4%
$200,000-$500,000 income: 0.6%
$500,000-$1,000,000 income: 1.1%
1,000,000-$5,000,000 income: 2.5%
$5,000,000-$10,000,000 income: 5.1%
over $10,000,000 income: 8.6%


It must be pointed out that audits are not the only way that tax returns are reviewed by the IRS. In 2015 Congress passed the Protecting Americans from Tax Hikes (PATH) Act. This law was designed to reduce fraud in returns where an Earned Income Tax Credit (EITC) was claimed. Accounting Today Dot Com reported in September of last year that 23.5% of EITC payments in 2020 were improper. That's $16.5 billion dollars. This report shows that this is not necessarily fraud, but it is a real problem.

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Would increased funding for the IRS pay for itself through increased revenue generation? The Congressional Budget Office seems to think so. In a report released in August of 2021 estimates are that the Biden proposal to increase IRS funding by $80 billion over the next ten years would generate over $200 billion in revenues over that same period.