Treasury
Inspector General for Tax Administration
Office of Audit
TRENDS IN COMPLIANCE ACTIVITIES
THROUGH FISCAL YEAR 2010
Issued on July 18, 2011
Highlights
Highlights of
Report Number: 2011-30-071 to the
Internal Revenue Service Deputy Commissioner for Services and Enforcement.
IMPACT ON TAXPAYERS
This report is a compilation of
statistical information reported by the Internal Revenue
Service (IRS). TIGTA did not verify
or validate the authenticity or reliability of the data and, therefore, did not
identify any specific impact on the taxpayer.
However, continued effort to improve compliance is important to reducing
the Tax Gap and maintaining the integrity of the voluntary tax compliance
system.
WHY TIGTA DID THE AUDIT
TIGTA conducts this
review each year, and it is included as part of our Fiscal Year 2011 Annual
Audit Plan and addresses the major management challenge of Tax Compliance
Initiatives. The overall objective was
to provide various statistical information regarding Collection and Examination
function activities.
WHAT
TIGTA FOUND
During Fiscal Year 2010, the IRS encountered many
challenges, including a variety of tax provisions that were created, extended,
or expanded. The IRS has the challenging
task of maintaining a quality workforce and enforcing tax laws in an
environment of changing tax legislation.
For example, the American Recovery and Reinvestment Act of 2009 included
56 tax provisions. At least 42 of the
514 Affordable Care Act provisions add to or amend the Internal Revenue Code,
and at least eight require the IRS to establish new operations. Collectively, these provisions represent the
largest set of tax law changes in 20 years.
Recent
staffing increases have resulted in an increase of Collection and Examination
function enforcement personnel by 19 percent since Fiscal Year 2006. This
compares with a 4 percent increase in the total number of IRS employees
during this same period, from 103,811 employees
in Fiscal Year 2006 to 107,622 employees at the end of Fiscal Year 2010.
The Fiscal Year 2010 Collection function activities showed
mixed results compared to Fiscal Year 2009. The IRS continued to increase the use of
collection enforcement tools. The number
of delinquent accounts closed by full payment increased, as did the amount
collected on delinquent accounts.
However, the Collection function received more delinquent accounts than
it closed, gross accounts receivable increased, and the number of tax
delinquency investigation tax periods closed with the receipt of a delinquent
tax return decreased. In addition, while
the number of taxpayers with delinquent accounts and delinquent returns in the
Queue decreased, it was offset by an increase in the number of these cases that
were shelved or surveyed.
The
Examination function’s recent increase in revenue agents and tax compliance
officers resulted in the most tax returns examined over the past five years,
although the majority of these examinations were conducted via
correspondence. The number of tax
returns examined increased for individual, corporate, and S Corporation tax
returns in Fiscal
Year 2010, while the number of
partnership examinations decreased and examinations of other types of tax
returns remained the same. The no-change
rates for examinations of individual income tax returns by revenue agents and
tax compliance officers increased in Fiscal Year 2010, but remained lower than the no-change rates reported in Fiscal
Year 2006.
WHAT TIGTA RECOMMENDED
Although
TIGTA made no recommendations in this report, IRS officials were provided an
opportunity to review the draft report.
IRS management did not provide any comments to the draft report.
READ THE
FULL REPORT
To view the report, including
the scope and methodology, go to:
http://www.treas.gov/tigta/auditreports/2011reports/201130071fr.html.
Email Address: TIGTACommunications@tigta.treas.gov
Phone
Number: 202-622-6500
Web Site: http://www.tigta.gov