63% of new audits as of Summer 2023 targeted taxpayers with income of less than $200,000

In Summer 2023, 63% of new audits were aimed at taxpayers earning less than $200,000, according to data compiled by The Wall Street Journal's editorial board. This group was dubbed the "IRS's most wanted."

A March report by the U.S. Treasury Inspector General for Tax Administration (TIGTA) highlighted the IRS's sluggish performance. Despite having a strategic operating plan to revamp its auditing structure and provide "transformational change for taxpayers," the IRS only completed 33% of its 58 milestones set for Fiscal Year 2023. The agency is uncertain about how or when it will complete the remaining milestones.

The IRS announced on Thursday its intention to significantly increase audit rates for large corporations, partnerships, and multimillionaires over the next three years. This initiative is part of a broader effort to boost collections through increased enforcement spending and hiring.

As part of its strategic operating plan for spending $60 billion in funding from the 2022 Inflation Reduction Act, the IRS aims to nearly triple the audit rate on corporations with assets exceeding $250 million. The target audit rate for these corporations is set to increase to 22.6% in the 2026 tax year, up from 8.8% in 2019.