Accountants Have Good News For Clients About Taxes
For accountants, the holiday season could be considered the lull before the storm. Come January, CPAs will be coping with month-end closing, year-end financials and preparing for the annual W-2 and 1099 mailings.
And then it's tax season.
This year, tax accountants can play Santa to their clients, delivering "Season's Greetings" and some good news about a subject that no one associates with good news -- tax audits.
For at least the last nine years, the number of audits the IRS conducts has been dropping, and precipitously. From auditing almost 1 in a 100 returns in 2010, the rate has dropped by half. That's even truer for high wealth individuals. Those reporting $1 million or more in individual income are less than half as likely to be audited as they were in 2010.
Only about 1 in 31 of these high income returns were audited last year, a significant decrease from the 1-in-8 returns audited in 2010.
The statistics come from Accounting Today, which last week published "Ten major trends in IRS audits."Nearly all the trends reflect what writer Jim Buttonow, a former IRS auditor and former head of H&R Block’s Tax Audit & Notice Services, said was the result of deep cuts in the IRS's auditing resources.
The 28% reduction means "The IRS’s auditing power has been greatly diminished," writes Buttonow. Field audits dropped to an all-time low last year and even criminal investigations and prosecutions have fallen by more than half since 2013.
"As the fear of an audit motivator becomes less of a reality," Buttonow says, "The IRS must seek to simulate the audit by touching as many taxpayers as they can." Their solution? "Sending a lot of non-audit notices to taxpayers."