Your chances of facing an IRS audit rate dropped to the lowest level in at least a decade in 2014 and are expected to fall further this year, according to new data USA TODAY obtained from the nation’s tax agency.

The audit rate, the percentage of individuals’ tax returns IRS revenue agents examined either in person or via correspondence, fell to 0.86% last year, the data show. That represents the lowest rate since at least fiscal year 2005.

After rising steadily from 2005-10, the number of IRS audits for individual taxpayers fell 21.4% during the succeeding five years, the data show.

The IRS audited slightly more than 1.2 million individuals last year, down more than 162,000 from 2013, and a drop of nearly 339,000 from 2010.

Audits fell in virtually every individual category and across income levels, even as the number of individual tax returns filed rose in all but two of the past nine years, the data show.

The IRS audited slightly less than 1.1 million taxpayers with income of less than $200,000 in 2014, a drop from more than 1.4 million in 2010. While nearly 41,000 individuals with annual income of $1 million or more faced audits in 2012, the number of similar audits in that category dropped to just more than 34,000 last year, the data show.

The audit declines coincide with recent drops in IRS funding and a steady falloff in revenue agents. It also comes as the tax agency seeks congressional approval for a fiscal year 2016 budget hike after being buffeted over dwindling taxpayer services and allegations it targeted conservative tax-exempt groups for increased scrutiny.

IRS Commissioner John Koskinen conceded in a Monday phone interview that the tax agency is “not the world’s most beloved.” But he warned that the audit rate decline could eventually “corrode” Americans’ faith in the federal tax system and undermine voluntary payment compliance.

“At this point, we do have a tax compliance ethos and people pay their fair share,” said Koskinen, who’s expected to cite the audit trend during a Tuesday speech to New York State Bar Association’s tax section. But he added: “If you’re in Des Moines and you’re writing that check, and you feel that maybe your neighbor down the street isn’t, or is getting away with something, that’s a problem.”

Arguing for additional budget funding, Koskinen cites IRS data that show restoring the number of revenue agents would produce nearly $1.3 billion in new government enforcement revenue once new hires complete training and reach full working potential in fiscal year 2018.

Asked whether the IRS could shift workers from other jobs to revenue agent duties, he said audits require time-consuming training. Additionally, the tax agency’s overall personnel count is down 13,000, a total that will rise to an estimated 16,000 this year, he said.

“Anyplace in the IRS is short-staffed,” said Koskinen.

However, the agency’s operations and quest for increased funding face “especially tough scrutiny,” Sen. Orrin Hatch, R-Utah, who chairs the Senate Committee on Finance, told Koskinen during a Feb. 3 budget hearing.

“And unfortunately, the IRS’ operations do not appear to be able to withstand such scrutiny at this time,” added Hatch, who cited the agency’s treatment of tax-exempt groups and other issues.

From: http://www.usatoday.com/story/money/2015/02/24/irs-audit-rate-drops/23876109/