What is the audit rate? Q.What is the audit rate? A.The audit rate is the percent of tax returns filed for a tax year that are ultimately examined by the IRS. About 153.9 million individual tax returns were filed based on 2018 income, but only about 520,000 of those returns were audited—an overall audit rate of 0.3 percent. Audit rates are generally highest for high-income taxpayers, taxpayers with business income, large corporations, and earned income tax credit claimants. Read more about What is the audit rate?
How does tax law allow businesses to recover the costs of capital assets? Q.How does tax law allow businesses to recover the costs of capital assets? A.Cost recovery is the ability to recover (deduct) the costs of an investment. The recovery of investments in tangible assets happens through depreciation, and the recovery of intangible assets is through amortization. Depreciation and amortization can be measured for economic, financial, or tax purposes. Read more about How does tax law allow businesses to recover the costs of capital assets?
How did the Inflation Reduction Act of 2022 affect the IRS’s budget? Q.How did the Inflation Reduction Act of 2022 affect the IRS’s budget? A.In 2022’s Inflation Reduction Act (IRA), Congress provided the IRS with additional funding of nearly $80 billion through 2031. Nine months later, however, Congress and the White House agreed to reduce the IRA funds by $21.4 billion. Read more about How did the Inflation Reduction Act of 2022 affect the IRS’s budget?