You may have heard that the Internal Revenue Service hasn't been auditing churches since 2009.
This is generally true because of the challenge the IRS faces with clearing the hurdles of the Church Audit Procedures Act (IRC 7611). For several years now, the IRS has been unable to finalize regulations related to the law concerning who is a "high ranking" IRS official authorized to approve church income tax audits.
However, based on what I'm told by churches and tax professionals, the IRS is active in church payroll tax audits. These audits are not subject to the IRC 7611 limitations.
Two reasons may be driving this IRS activity with churches:
Limited resources. IRS officials consistently say their funding is tight. In addition, a string of congressional investigations involving the IRS in recent years has cost the agency millions of dollars and diverted IRS staff ...