IRS Audits Dropped Slightly in 2022

The IRS divides taxpayers into different examination classes. The IRS sees the typical taxpayer reporting an income of less than $200,000. These taxpayers faced an odds of audit of just 1.9 out of every 1,000 returns filed (0.19%). This group accounts for 80 percent of all 1040 returns once these poorest wage earners and those reporting $200,000 or more in positive income are set aside.

Higher-income and more complex business returns with Schedules C or F (nonfarm and farm) revenue generally increased the odds of audit for those reporting incomes of over $200,000 but less than $1 million. However, the odds of audit for these groups still remained below the odds of audit experienced by the lowest income wage-earners IRS targets.

Returns for those without revenue from a business had an odds of audit of 4.9 out of every 1,000 returns filed (0.49%). The odds of audit rose to twice that for taxpayers reporting similar incomes but running a business or farm. Their odds of audit for these was 10.3 out of every 1,000 returns (1.03%).

Millionaires, as discussed previously, did have the highest odds of being audited. However, if one ignores the fiction of auditing a millionaire by simply sending a letter through the mail, the odds that millionaires received a regular audit by a revenue agent (1.1%) was actually less than the audit rate of the targeted lowest-income wage-earners whose audit rate was 1.27 percent!

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