2022 IRS Audit Rate and 2023 IRS Outlook

Last week we covered the current state of the IRS and the improved tax return backlog. We now have additional insights into those tax returns filed in 2022. 

One of those insights provides the answer to one of the most frequently asked questions: What are the chances of being audited?

In 2022, the audit rate was 0.38% (down from .41% in 2021). Only 626,204 of the more than 164 million filed returns were audited. Of these, 532,609 were “correspondence audits”, which normally relate to simple mistakes and can be addressed via quick communication with the IRS. 

While audit rates varied by income level, those who qualify for the Earned Income Tax Credit continue to face the largest risk of audit.

While we can’t forecast the audit rate in 2023, the National Taxpayer Advocate did publish an outlook for the 2023 tax year. Processing times for all correspondence and tax returns should be reduced as a result of the lessened backlog. The IRS has also already hired 4,000 additional customer service representatives to aid in correspondence with taxpayers (I can confidently say this has improved already as I was able to speak with an IRS representative with zero wait time last week.)

We will see how the IRS is able to balance their new staff as tax returns begin to roll in.