A new report has revealed that the wealthiest Americans are being audited at a considerably lower rate than they were more than a decade ago, owing to resource and funding shortages at the Internal Revenue Service (IRS).
According to the Government Accountability Office, the audit rate for persons earning more than $5 million per year dropped to just over 2% in 2019, down from over 16% in 2010.
Data suggests that just approximately one in fifty of the superrich in 2019 were audited, compared to one in six in 2010.
"This is yet more evidence of the consequences of two decades of IRS budget cuts," Howard Gleckman, senior fellow in the Urban-Brookings Tax Policy Center at the Urban Institute, told CNBC.
He went on to say that, given the funding and staffing constraints that have plagued the country for years, "I suspect 2020 was far worse."
"The wealthy are still audited at a higher rate than the general taxpayer population," according to CNBC. Nonetheless, their audit rates have fallen at a far faster rate.
The IRS has been battling severe staffing and financial challenges for some time. According to the Congressional Budget Office, the tax agency has around 20,000 fewer staff and 20% less money when adjusted for inflation since 2010.
Such staffing numbers imply that they have stayed roughly constant since the 1970s.
Furthermore, according to a report from the Treasury Inspector General for Tax Administration, the IRS was only able to hire 3,660 people last year, despite a target of 5,473. Pay for "low-level clerical positions" was one of the most discussed topics. The report stated, "These employees can find similar entry-level positions in private industry for higher pay."
The IRS announced in March that it would hire 10,000 people to help with a backlog of 24 million unprocessed tax returns and communications.
"We are forced to make difficult decisions regarding priorities, the types of enforcement actions we employ, and the service we offer," Commissioner Charles P. Rettig told a House hearing last month owing to money and staffing difficulties.
Furthermore, National Taxpayer Advocate Erin Collins informed Congress that the IRS' headcount has shrunk by 17 percent since 2010, despite a 19 percent increase in overall workload based on the number of tax files.
Meanwhile, President Joe Biden and most Democrats have advocated for a $80 billion investment over the next decade to modernize the IRS's capabilities, but the House-approved measure has stalled in the Senate.
