WASHINGTON – A worst nightmare comes true each year for one out of every 200 Maryland income earners: the tax man comes knocking on the door.
But taxpayers are less likely to be the target of an Internal Revenue Service audit in Maryland than most other places in the country, according to a four-year analysis of IRS records.
About 0.5 percent of Maryland tax returns are audited each year, totalling about 10,000, according to a study by Syracuse University’s Transactional Records Access Clearinghouse.
Nationally, the chance of being audited was higher at 0.7 percent – one out of every 143 income-earning Americans.
Marylanders average adjusted gross income in 1995 was $41,880 – the seventh highest in the country. But, even with the high income levels, Maryland was only 54th most likely to receive audits in 1995 out of 63 IRS districts, the study found.
Other high-income districts, such as San Francisco, Anchorage, Alaska, New York, Hartford, Conn., and Chicago, all had higher audit rates than Maryland in 1995.
The study found large discrepancies in the audit rates. The Las Vegas district, for example, had a 2 percent audit rate – one out of every 50 income earners – while the Louisville, Ky., region had a 0.3 percent audit rate – one out of every 333.
The Senate Finance Committee last month looked at the discrepancies and allegations that some IRS audits are politically motivated.
When Paula Corbin Jones received notice of being audited, her representatives suggested it was retaliation for Jones’s sexual harassment suit against President Clinton.
The hearings also addressed mismanagement problems in the organization, audit quota systems and a lack of customer service.
In 1996 the General Accounting Office showed that calls to the IRS information help line were only answered 26 percent of the time.
Rep. Benjamin Cardin, D-Baltimore, is pushing legislation that seeks to restructure the IRS, making it more modern, efficient and service oriented.
“This will be the first reform of the IRS since 1952,” said Cardin spokeswoman Susan Sullam. “It needs to be brought into the 21st century.”
Included in the bill are plans to create an IRS oversight board, re-train personnel, modernize and computerize the agency and give the commissioner more authority, Sullam said.
She said the House is expected to pass the bill, which is backed by President Clinton, before it adjourns in November.
The bill will not reach the Senate until next year, too late for changes to be made before the next tax season.
“Ultimately, it (the bill) will save taxpayers money because it will be a more efficient organization,” Sullam said.