IRS audit rates are down

Tax cheats, the odds have been slightly in your favor.

Strapped by budget cuts and staff reductions, the Internal Revenue Service audited fewer people last year than it has in more than a decade, according to new agency data. The IRS audited a little more than 1 million individual tax returns in 2016, the lowest amount since 2004.

The number of audits declined 16 percent from the year before, marking the sixth straight year of declines.

Taxpayers at all income levels have become less likely to have their tax returns flagged for an audit, with only 0.7 percent of 147 million individual tax returns audited last year, down from 1 percent in 2007.

The IRS long has cautioned that budget cuts hitting the agency in recent years could leave it with fewer agents to catch missteps and collect revenue. The agency lost more than 17,000 employees since 2010, including 7,000 enforcement agents, the agency said.

While the IRS has lost some manpower, tax experts say that you may want to think twice before testing the waters by leaving off income or exaggerating tax breaks.

'I certainly would not advise anyone to try to beat the IRS,” said Tony Reardon, national president of the National Treasury Employees Union, which represents IRS employees and workers from other federal agencies. 'There are certainly mechanisms in place to deal with folks who decide they're not going to pay.”

For example, people with simple tax returns should remember that the IRS already knows how much they made last year. Employers and investment businesses report wage and income data that is included in your W-2 form and 1099 forms directly to the IRS.