Is Your Tax Return Audit Bait?

With tax day nearing, you may be wondering what triggers an IRS audit.

The short answer: It often takes more than it has in the past. In fiscal 2015, which ended Sept. 30, the Internal Revenue Service audited less than 1% of nearly 147 million individual returns, the lowest rate in a decade.

The drop in the audit rate stems from budget cuts, according to IRS Commissioner John Koskinen. Last year, the agency had $900 million less in funding and 25% fewer enforcement officers and agents than it did in 2010. Revenue from audits and other enforcement also dropped last year, to $54.2 billion, from about $57 billion in 2014.

In a November speech, Mr. Koskinen cited an IRS estimate that every dollar invested in the agency produces $4 in revenue.

The overall numbers don’t tell the whole story. In recent years, the IRS has increased its focus on high earners, and in 2015 it audited nearly 10% of returns with $1 million or more of income. In 2006, just 5.3% of taxpayers reporting at least $1 million of income were audited.

Tell Congress: Pass the Fair Tax Act of 2015! Sign the petition.