In May of this year, the IRS was hacked and they estimated account information was taken from 114,000 taxpayers. Recently, they increased this estimate to 334,000.
In 2013 it is estimated that the IRS issued refunds in the amount of $5.8 billion to fraudulent tax filings.
As the IRS deals with these challenges and the Affordable Care Act, the funding given by Washington to the IRS continues to decrease. Some may say that is good news and there may be fewer audits. However, the service coming from the IRS has decreased dramatically. If our office needs to contact the IRS for our clients, we can plan on a wait of at least an hour and in most cases, two hours, on the phone. So when the IRS makes a mistake, it can takes months before it is cleared. A recent example of this is when a case of a 1099 for $940 was reported to the IRS for $94,000. It took three months for the IRS to clear this matter.
It would make sense that if the IRS were to apply more of their limited recourses to stopping fraudulent tax filings, then there would be substantially more savings than the smaller audits.