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Low-income wage-earners taking the earned income tax credit had a higher-than-expected audit rate, report says.
Of the more than 164 million individual income tax returns filed with the IRS last year, only 626,204 were audited—down from 659,003 during fiscal year 2021, according to a report released on Jan. 4 by the Transactional Records Access Clearinghouse (TRAC) at Syracuse University.
Of those 626,204 audits, 93,595 were regular audits while the remainder (532,609) were correspondence audits, which are usually done for simple mistakes on a tax return and can be easily corrected through mail correspondence with the IRS.
So, the odds of being audited in FY 2022 had fallen to 3.8 out of every 1,000 tax returns filed, or 0.38%. In FY 2021, the odds of an audit were 4.1 out of every 1,000 returns filed, or 0.41%, according to the report.
While the 2022 Inflation Reduction Act provides the IRS with $80 billion of future funding to ramp up audits of the wealthy, IRS revenue agents were only able to audit a small number of millionaire returns last year. During 2022, the odds a millionaire was audited by an IRS revenue agent was just 1.1%, according to the report:
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