Nobody wants to get that dreaded IRS audit letter, but lately, it’s been feeling like a bit of a lottery ticket – one you really don’t want to win.
And with all the internal chaos happening at the IRS lately, it’s even harder to predict who’s actually at risk. The truth? Fewer audits are happening overall… but the reasons why might actually freak you out a bit.
Over the past several years, less than 1% of all tax returns got audited. To be more specific, only 0.44% of individual returns and 0.74% of corporate ones were flagged between 2013 and 2021. Sounds good, right? Well, not so fast. Those low rates weren’t because we all suddenly got better at taxes – it was more about the IRS running on fumes.
Years of budget cuts left the agency with not enough people, not enough tech, and definitely not enough funding to actually enforce the tax laws the way it’s supposed to. That started to change when the Inflation Reduction Act pumped some cash back into the IRS, but then Congress clawed a bunch of that funding right back. So now they’re stuck again, trying to do more with less – way less.
So who was getting audited during that time? Mostly two types of people: very rich folks and very low-income households claiming the earned income tax credit. If you were making $10 million or more, there was a nearly 9% chance the IRS came knocking. But if you were making between $50,000 and $500,000? The chance was tiny – 0.5% or less. Still, people on the lower end who claimed that earned income credit were oddly targeted more often than middle-income folks.
And now? Everything’s up in the air. The IRS is on its fourth acting commissioner since January. Staff are bailing left and right – layoffs, retirements, and straight-up burnout. Most of the cuts so far? They’ve hit the enforcement teams. Yep, the very people who actually do the audits and chase unpaid taxes.
This mass exit comes right as the IRS is being pushed into the future with artificial intelligence. They’ve already started using AI to analyze returns, but now it might end up taking on a much bigger role – way faster than originally planned. Treasury Secretary Scott Bessent is promising a more efficient, AI-powered IRS, but even he admits they don’t really have it all figured out yet.
The problem? AI might be fast, but it’s not human. You can train a bot to look for red flags, but deciding whether something’s truly off or just a weird one-time situation? That still takes a human brain. Former IRS Commissioner Danny Werfel warned that throwing AI into the deep end without enough real people watching over it could actually hurt the agency’s ability to collect what it’s owed.
“We briefed the new team and said, if you want to downsize, fine – but if you don’t have your tech locked in, you’re gonna slide backward,” Werfel said. And sliding backward in this case could mean billions of dollars slipping through the cracks.
Complicated cases, like those involving the ultra-wealthy, big corporations, or messy partnerships, need trained agents. AI’s not ready to untangle all that yet. But what it can handle are the simpler cases – especially those that lead to “correspondence audits.” These are the audits done by mail, usually aimed at average folks with basic returns. So while the big fish might swim free for a while, smaller fry might start getting grilled more often.
And if you do get audited now? Good luck getting help. With fewer staff on board, reaching an actual human at the IRS is gonna be a lot harder. You might end up stuck in AI-run phone trees or waiting weeks for someone to answer a letter. And if there’s a mistake – on your end or theirs – it’s going to take longer than ever to fix.
The bottom line? Fewer audits might sound like good news, but the system behind them is wobbling. AI’s coming in hot, the experts are heading out the door, and no one really knows what the future of tax enforcement is going to look like. If you’re filing your taxes now, cross your fingers… but also double-check everything. Because while the odds are still low, the randomness is real – and you might just get caught in the crossfire of a very confused system.
