ABA MAY MEETING: Declining Audit Rates Reflect IRS Budget Cuts

CCH Tax Day Report

Declining audit rates reflect budget cuts, Tammy Ripperda, deputy commissioner, Small Business/Self Employed Division, IRS, told practitioners at the May Meeting of the American Bar Association (ABA) Section of Taxation on May 12 in Washington, D.C. In response, the Service is working to improve efficiencies in operations and reduce taxpayer burdens, Ripperda said.

The IRS audited 0.7 percent of all individual income tax returns in calendar year (CY) 2015 (IR-2017-69; TAXDAY, 2017/03/31, I.3). Approximately two-thirds of individual audits were correspondence audits and one-third were field audits, the Service reported.

The Service is doing more with less, Ripperda said, and this impacts audit coverage. One practitioner noted that entrepreneurs appear to be subject to audits more than other taxpayers.

Ripperda also described a pilot program involving online communications with taxpayers. “We can send a document request to the taxpayer and the taxpayer can upload documents in response,” Ripperda said. Both the taxpayer and the taxpayer’s representative have to go through an authentication process, she explained, adding that “the pilot is invitation only.”

In other news, the IRS is seeing a significant uptick in direct debit installment agreements, Ripperda said. Direct debit installment agreements have the payments directly debited or withheld from a checking account.

By George L. Yaksick, Jr., Wolters Kluwer News Staff

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