The IRS Audit Rate Keeps Falling, Now Below 7% for Households Making $10 Million or More
The IRS audited just 892,000 individual tax returns last year, for an audit rate of 0.59%, the IRS said Monday. That marks the seventh year in a row that the audit rate has fallen.
The IRS Data Book for fiscal year 2018 shows that audits of high-income households fell particularly sharply. Last year, the IRS audited 6.66% of households reporting more than $10 million in income, down from 14.52% the year before – and $34.69% in 2015.
Critics say the IRS is being starved of the resources it needs to do its job, noting that the agency’s budget is 19% smaller than it was in 2010, adjusted for inflation. Treasury Inspector General for Tax Administration J. Russell George testified earlier this month that the IRS was missing out on at least $3 billion in revenues each year due to a lack of personnel.
President Trump’s 2020 budget calls for a 1.5% increase for the IRS budget, as well as $15 billion over 10 years for enforcement. The White House said the increased funding would more than pay for itself through stricter enforcement.
Republicans lawmakers, who have cut the agency’s budget for years, have expressed skepticism about increasing the IRS budget. “I’m not averse to beefing up their budget a little bit but I want to see results,” Sen. John Kennedy (R-LA), who heads the subcommittee that oversees the IRS budget, told The Wall Street Journal’s Richard Rubin. “I’ve got a lot of confidence in the new commissioner and in the new secretary, but I’m not into just throwing money at the wall because the bureaucracy says we need more.”
The rollercoster ride in bitcoin since the start of the year has not dampened wealth manager Jim Paulsen's enthusiasm for the cryptocurrency. Yet Paulsen, chief investment officer for Leuthold Group, which manages $1 billion, cannot own bitcoin in client portfolios due to regulatory constraints. The promise of an asset class that behaves differently than stocks or bonds is leaving portfolio and wealth managers scrambling own cryptocurrencies if they can.
Mortgage rates have risen past a psychological benchmark for the first time since they fell to historic lows during the pandemic. The average rate on a 30-year fixed-rate mortgage increased to 3.02% this past week, according to Freddie Mac’s Primary Mortgage Market Survey—the first time since July that the rate has risen above 3%. “Since reaching a low point in January, mortgage rates have risen by more than 30 basis points,” wrote Freddie Mac’s chief economist, in a release.
GameStop shares closed up 6.4% at $131.93 after earlier hitting $147.87, their highest since a surge in the heavily shorted stock late last month. One analyst and some Twitter users pointed to a cryptic tweet by Ryan Cohen, a major shareholder of GameStop and founder of e-commerce firm Chewy.com, as a plausible reason for the move, although Reuters could not independently determine causation. The late afternoon rally in GameStop began roughly around the time that Cohen tweeted what appeared to be a screenshot with the puppet dog advertising mascot of Pets.com, a famous casualty of the dotcom bubble two decades ago.
Stock-market timers, who as recently as two weeks ago were irrationally exuberant, have reacted to the market’s recent correction by beating a hasty retreat. Consider how quickly the Nasdaq-focused stock-market timers that my firm monitors have jumped on the bearish bandwagon. As recently as Feb. 12, their average recommended exposure level stood at 88.9%, which was higher than 97.9% of all daily readings since 2000.
Oil prices shot as much as 5% higher on Thursday as OPEC and its allies agreed to extend most of their production cuts through April, a sign that high prices could be here to stay. Oil company stocks jumped, too, often much more than the commodity, because prices this high will give many of them operating leverage. Because capital costs are high in the industry, oil company margins expand considerably once prices rise above $50 and companies have fully paid for the cost of the equipment and labor they need to extract oil.