How Many Tax Returns Does the IRS Audit Every Year?
The IRS audited more than 625,000 federal tax returns out of the 165 million they received in 2022. That equals an average of four tax returns being audited out of every 1,000. In recent years, the number of IRS employees was reduced, resulting in the lowest-ever percentage of audits.
In the past year, however, the IRS received additional funding and is adding back more employees. This change will likely mean an increase in audits starting with 2023 tax returns.
Who is Most Likely to be Audited by the IRS?
It seems counterintuitive but the IRS tends to audit more low-income earners making less than $25,000 per year than people reporting much higher income.
It seems counterintuitive but the IRS tends to audit more low-income earners making less than $25,000 per year than people reporting much higher income.
Unfortunately, taxpayers who are eligible to take the earned income tax credit (EITC) and receive bigger refunds also account for the majority of underreporting and tax return errors.
The second most audited income group is taxpayers making close to or over $1 million dollars per year. Individuals in higher tax brackets naturally have more complicated tax returns that often contain several mistakes, missing information, or other discrepancies that trigger an IRS audit.
How Soon After You File Your Tax Return Will You Know You Are Being Audited?
Once you file a federal tax return, it could take the IRS up to two years to perform an audit on that return. For example, you may not receive an audit notice in the mail from the IRS for a 2023 tax return until late 2024 or early 2025.
However, be aware that the IRS has the right to audit tax returns that are up to five or six years old, especially if they believe the taxpayer cheated the government.
How Will I Get Notified of an Audit
If the IRS is doing an audit on one of your tax returns, you will receive a notice in the mail. You will not receive an email or phone call when you are being audited.
An audit notice will describe discrepancies found in your return, such as questionable deductions or income amounts, and request that you respond to the audit with additional information.
In instances of egregious discrepancies, the IRS may want a face-to-face meeting with the person who filed the tax return. Meetings with an IRS agent about an audit may be held in your home, at your work, or at a local IRS field office.
What Happens During an IRS Audit? How Long Does an Audit Take to Complete?
Taxpayers have several options when being audited.
These options include:
- Amend your tax return based on findings from the IRS.
- Request an extension for providing information the IRS requested.
- Appeal the audit.
When an audit claims that a taxpayer is not entitled to a refund but, instead, owes money to the IRS, interest will continue accruing on the amount owed until the audit process is officially completed.
Depending on the complexity of the tax return, the number of discrepancies, and the nature of the discrepancies, audits can take as little as one month or as long as several years to resolve.
The IRS does not have a customer service number dedicated to answering audit questions. If you want to speak to an IRS representative about an audit letter, call the main IRS number at (800) 829-1040.
What Happens After an IRS Audit?
Audit results vary from taxpayer to taxpayer.
Here are the most common outcomes of IRS audits:
- Owe the IRS a new tax debt.
- Owe the IRS more money than what the taxpayer previously calculated they owed on their return.
- Owe the IRS nothing.
- Qualify for a refund.
- Pay penalties and interest on money owed to the IRS during the audit process.
- Face criminal charges if the IRS finds the taxpayer committed fraud.
Be aware that if you appeal an audit, and you are found to owe a tax debt at the conclusion of the appeal, you will owe interest and penalties on that debt that have been accruing since you received an audit letter in the mail.
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