But fines and jail time still await tax frauds
Here’s something the IRS probably doesn’t want you to know: Our entire tax code mostly works on the honor system. The much-feared agency only audited 0.86% of individual tax returns in 2014, the lowest percentage since 2004, Bloomberg reports. Among households with incomes greater than $1 million, 7.5% were audited.
The auditing rate is falling because the IRS is bleeding employees. By 2014, the number of revenue agents had declined 16% from its 2010 peak, to 11,629. It’s a trend that IRS Commissioner John Koskinen called “deeply disturbing” in a Tuesday speech.
At its peak efficiency, the IRS was auditing about 1.11% of individual returns back in 2011. Even if those figures seem small, getting caught committing tax fraud can result in heavy fines or jail time—which seems to be enough to keep most citizens honest.