The Wall Street Journal reported this morning that the Internal Revenue Service (IRS) has decreased the number of audits it performs in 2008, but is auditing more upper-income filers. From the article:

IRS agents examined 1.01% of all individual income-tax returns last year, down slightly from 1.03% the prior year, officials said. This decline came after five consecutive annual increases, as the agency responded to congressional pressure to crack down harder on tax dodgers.

But at the same time, tax collectors have greatly intensified their scrutiny of upper-income Americans, especially those making $200,000 or more. In the year ended Sept. 30, the IRS audited 130,751 returns of people in this group. That was up 16% from the prior year -- and up 49% from 2006.

This is certainly a good change - and one that we advocated throughout 2008 after the release of our report detailing some of the poor tax enforcement policies of the IRS. Unfortunately, since the IRS is doing fewer audits overall, the income from brought in by the auditing process decreased in 2008. It is also likely that personnel at the IRS are stretched thin after about 300 auditor positions were eliminated on Sept. 30, 2008. So it is unlikely there will be any big expansions in enforcement policies in 2009.