Funding for enforcement by the IRS is 5% less than last year and audit rates have definitely declined. Total examinations, both field and correspondence have dropped more than 20% since 2010. Taxpayers in the higher brackets still encounter more audits but this rate has also decreased.
But this does not tell the whole story. Many more taxpayers will be caught in computer mis-matches from information forms like W-2s and 1099s. If these are factored in, then about 1 in 25 returns has some question from the IRS.
I always think it’s best to avoid any of these contacts from the IRS. Receiving a letter from the IRS is stressful and could lead to other issues. Be sure to account for all information returns; if you do not receive one that you should, inquire!