The Internal Revenue Service (IRS) does various compliance checks to ensure the accuracy of information reported on taxpayers' returns. In recent years, the audit rate--the proportion of tax returns that IRS audits each year--has drawn attention because of a long-term decline in audit rates and the differences in audit rates for lower and higher income individuals. This report (1) describes the changes in audit rates for individual income tax returns overall and for categories, such as major sources (i.e., nonbusiness versus business) and levels of income for fiscal years 1996 through 2000; (2) discusses IRS' reasons and related data explaining the changes in audit rates; and (3) describes what is known about the effects of changes in the audit rates on tax compliance. In comparing fiscal years 1996 and 2000, GAO found that the overall tax audit rate of individuals declined about 70 percent. These rates declined regardless of the individual taxpayer's income level. IRS cited the following three reasons for the decline in audit rates for fiscal years 1996 to 2000: (1) the number of IRS auditors for individual returns declined by more than half due to a decline in total staff and decisions to change staffing priorities to focus on customer service; (2) the remaining auditors were used in other areas, such as assisting taxpayers; and (3) audits took longer due to additional audit requirements, such as more written communications with taxpayers about the status of their audit. To explain the changes in the audit rates by income levels, IRS officials cited increases in the number of high-income tax returns and an audit focus on noncompliance by earned income credit claimants, who are lower income individuals. Finally, neither IRS nor external observers know how the decline in audit rates affects voluntary tax compliance.