What are the benefits and drawbacks of exact withholding? Q.What are the benefits and drawbacks of exact withholding? A.An exact-withholding system could ease the burden of tax compliance on many individuals, especially if it were accompanied by substantial simplifications to the tax code. Potential drawbacks include a heavier administrative burden for those charged with withholding income tax and for government collection agencies. Read more about What are the benefits and drawbacks of exact withholding?
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?
What technology does the IRS use? Q.What technology does the IRS use? A.The IRS’s computer systems and data analytics have not kept up with technological advances despite decades of modernization initiatives. The Inflation Reduction Act provides the IRS with a new source of funding dedicated to business systems modernization. Read more about What technology does the IRS use?