WASHINGTON (Reuters) - The U.S. Internal Revenue Service said on Friday that it audited fewer high-income Americans in 2013 than it did in 2012 or 2011, while it conducted more audits of people with no income.
Total audits fell by 5 percent from 2012 to reach the lowest level since 2008 as the IRS said it coped with budget cuts.
For the fiscal year that ended September 30, 2013, the IRS said it audited 24.2 percent of individual tax returns with adjusted gross income of $10 million or more. That was down from 27 percent in 2012 and 30 percent in 2011.
There were also fewer individual tax returns audited in the $5 million to $10 million gross income band, the IRS said.
In total, the IRS audited about 1.4 million individual returns. IRS Commissioner John Koskinen said in a statement that budget cuts at the agency have “presented challenges.”
Wealthy Americans historically are the likeliest to be audited. The IRS a few years ago started a “Global High Wealth Industry Group” to audit high-wealth individuals more efficiently.
But Congress in January cut the IRS’s fiscal 2014 budget by about 4 percent to $11.3 billion.
The funding cuts have forced the IRS to cut the number of customer service representatives it employs during tax season, Colleen Kelley, president of the National Treasury Employees Union said in a statement. “Both taxpayers and employees are frustrated.”
Last year, audits were done on 6 percent of individual tax returns reporting no gross income, up from 2.7 percent in 2012 and 3.4 percent in 2011.
Reporting by Patrick Temple-West; Editing by Leslie Adler