COVID-19-Related Government Budget Deficits May Spur Aggressive Payroll and Sales Tax Audits 

Since COVID-19 invaded the United States earlier this year, the restaurant industry has not been the same. The days of full dining rooms and crowded bars are gone for now leaving many businesses struggling to pay employees and keep its doors open. However, restaurants are not alone in their struggles. Businesses across America are facing decreases in revenue. 

America’s economic struggles are not just a private sector problem. Less revenue for businesses and income for individuals means less tax dollars for federal and state governments. On July 13, the U.S. Treasury Department reported a monthly federal deficit of $864 billion. States are facing similar problems. The Center on Budget and Policy Priorities estimates that state budget shortfalls will reach almost 10 percent in the current fiscal year and about 25 percent in fiscal year 2021.

Although the IRS and state taxing authorities have initially slowed their pace of audit activity to protect the health and safety of their…