Forbes: IRS Official Audit Rate Down But The "Real" Audit Rate Is The Problem, by Ashlea Ebeling:
The Internal Revenue Service audited only 0.6% of 2016 individual income tax returns, according to its 2017 Data Book released today. That means your chance of an official audit was about 1 in 160.
The National Taxpayer Advocate, an IRS watchdog, begs to differ. The way it defines “audit,” your chance of hearing from the IRS is more like 1 out of 16.
For fiscal year 2016, when the official IRS audit rate for individual income tax returns was 0.7%, the Advocate’s office found that the “unreal” audit rate was 6.2%.
In its annual report to Congress in January, it found that the IRS conducts significant types and amounts of compliance activities that it doesn’t deem to be traditional audits, which include math error notices and document-matching notices (also known as automated underreporter notices). Traditional audits, by contrast, can be in the field or by correspondence, but involve specific requests to actively examine returns and back-up materials. ...
The latest IRS data shows that it audited almost 934,000 individual income tax returns in fiscal year 2017, the lowest number of audits since 2003. The 0.6 percent official chance of being audited was the lowest coverage rate since 2002. The majority of these audits (71%) were conducted via correspondence, with the remaining 29% conducted in the field.
The Taxpayer Advocate lists audit rates and the issue of “real” versus “unreal” audits as one of the most serious problems facing taxpayers (Most Serious Problems #4). Overall traditional audits were 1 million while traditional audits plus “unreal” audits came to 9.1 million in fiscal year 2016. The Advocate’s point is that the IRS does a lot more compliance work than one might think, says counsel Kenneth Drexler.