Biden’s IRS doubled audits on the wealthy, data shows

It was a promise repeated many times by President Joe Biden’s administration: The IRS would conduct more audits of wealthy Americans, but audit rates would not rise for households earning less than $400,000 per year.

Biden and the Democrats made that pledge as they bolstered funding for the IRS, hoping that more enforcement aimed at wealthy tax evaders would generate revenue to pay for climate and health care programs.

Republican lawmakers warned that more money for the IRS would lead to more audits across the board, and that middle-class taxpayers would be targeted.

But new data released by the IRS last week suggests that the agency upheld Biden’s promise in 2024. With an audit rate of 0.8%, people making over $500,000 on their latest return were more than twice as likely to be audited compared with the same point in the audit cycle in previous years.

Meanwhile, the matching audit rate for taxpayers making under $500,000 declined slightly. The figures covered 2022 tax returns that were filed in 2023 and audited during the 2024 fiscal year, which ended Sept. 30.

Daniel Werfel, the IRS commissioner for the last two years of Biden’s term, said in an interview Wednesday that he had changed the agency’s mandate so that it could “ramp up” audits on certain types of returns, while keeping audit rates steady for most individuals.

On average, audits of individuals with high incomes return substantially more money to the government, so proponents have argued they are the most effective way for the tax agency to collect more revenue.

Many academic tax experts say increasing enforcement is also an effective cheating deterrent. One study found that for every dollar the IRS collects from an audit, it collects another $3 in the future because the individual will be less likely to dodge paying taxes. Other studies have found that people pay more in taxes when they hear someone else was audited.

The new data comes with caveats. The IRS generally has three years to pursue an audit, and a majority of audits are opened after more than one calendar year has passed.

Another open question is how much money the IRS will actually collect from the new audits, given the changing policies and personnel at the agency. It has experienced instability in its leadership ranks, with four different acting commissioners since the start of the Trump administration.

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