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Accountants Have Good News For Clients About Taxes

November 26th, 2019

IRS Tax rates fall

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."

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