Close Close Comment Creative Commons Donate Email Add Email Facebook Instagram Facebook Messenger Mobile Nav Menu Podcast Print RSS Search Secure Twitter WhatsApp YouTube

IRS: Sorry, but It’s Just Easier and Cheaper to Audit the Poor

Congress asked the IRS to report on why it audits the poor more than the affluent. Its response is that it doesn’t have enough money and people to audit the wealthy properly. So it’s not going to.

IRS Commissioner Charles Rettig at the Capitol on May 15, 2019, in Washington. Rettig says increasing audit rates of the wealthy depends on whether the IRS budget grows. (Anna Moneymaker/Getty Images)

ProPublica is a nonprofit newsroom that investigates abuses of power. Sign up for ProPublica’s Big Story newsletter to receive stories like this one in your inbox as soon as they are published.

The IRS audits the working poor at about the same rate as the wealthiest 1%. Now, in response to questions from a U.S. senator, the IRS has acknowledged that’s true but professes it can’t change anything unless it is given more money.

ProPublica reported the disproportionate audit focus on lower-income families in April. Lawmakers confronted IRS Commissioner Charles Rettig about the emphasis, citing our stories, and Sen. Ron Wyden, D-Ore., asked Rettig for a plan to fix the imbalance. Rettig readily agreed.

Last month, Rettig replied with a report, but it said the IRS has no plan and won’t have one until Congress agrees to restore the funding it slashed from the agency over the past nine years — something lawmakers have shown little inclination to do.

On the one hand, the IRS said, auditing poor taxpayers is a lot easier: The agency uses relatively low-level employees to audit returns for low-income taxpayers who claim the earned income tax credit. The audits — of which there were about 380,000 last year, accounting for 39% of the total the IRS conducted — are done by mail and don’t take too much staff time, either. They are “the most efficient use of available IRS examination resources,” Rettig’s report says.

On the other hand, auditing the rich is hard. It takes senior auditors hours upon hours to complete an exam. What’s more, the letter says, “the rate of attrition is significantly higher among these more experienced examiners.” As a result, the budget cuts have hit this part of the IRS particularly hard.

For now, the IRS says, while it agrees auditing more wealthy taxpayers would be a good idea, without adequate funding there’s nothing it can do. “Congress must fund and the IRS must hire and train appropriate numbers of [auditors] to have appropriately balanced coverage across all income levels,” the report said.

Since 2011, Republicans in Congress have driven cuts to the IRS enforcement budget; it’s more than a quarter lower than its 2010 level, adjusting for inflation.

Recently, bipartisan support has emerged in both the House and Senate for increasing enforcement spending, but the proposals on the table are relatively modest and would not restore the budget to pre-cut levels. However, even a proposed small increase might not come to pass, because it’s unclear whether Congress will actually pass any appropriations bills this year.

In response to Rettig’s letter, Wyden agreed in a statement that the IRS needs more money, “but that does not eliminate the need for the agency to begin reversing the alarming trend of plummeting audit rates of the wealthy within its current budget.”

Do you have access to information about the IRS that should be public? Email paul.kiel@propublica.org. Here’s how to send tips and documents to ProPublica securely.

Protect Independent Journalism

ProPublica is a nonprofit newsroom that produces nonpartisan, evidence-based journalism to expose injustice, corruption and wrongdoing. We were founded ten years ago to fill a growing hole in journalism: newsrooms were (and still are) shrinking, and legacy funding models failing. Deep-dive reporting like ours is slow and expensive, and investigative journalism is a luxury in many newsrooms today — but it remains as critical as ever to democracy and our civic life. A decade (and five Pulitzer Prizes) later, ProPublica has built the largest investigative newsroom in the country. Our work has spurred reform through legislation, at the voting booth, and inside our nation’s most important institutions.

This story you’ve just finished was funded by our readers and we hope it inspires you to make a gift to ProPublica so that we can publish more investigations like this one that holds people in power to account and produces real change.

Your donation will help us ensure that we can continue this critical work. From the Trump Administration, criminal justice, health care, immigration and so much more, we are busier than ever covering stories you won’t see anywhere else. Make your gift of any amount today and join the tens of thousands of ProPublicans across the country, standing up for the power of independent journalism to produce real, lasting change. Thank you.

Donate Now

Portrait of Paul Kiel

Paul Kiel

Paul Kiel covers business and consumer finance for ProPublica.

Latest Stories from ProPublica

Current site Current page