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Treasury Inspector General for Tax Administration

Press Release


October 1, 2014
TIGTA - 2014-26
Contact: David Barnes
(202) 622-3062
David.barnes@tigta.treas.gov
TIGTACommunications@tigta.treas.gov

TIGTA Releases Annual Report on IRS Compliance Trends

WASHINGTON – Despite less funding and fewer employees, the Internal Revenue Service (IRS) increased the total dollars received and collected for the third straight year, according to a new report publicly released today by the Treasury Inspector General for Tax Administration (TIGTA).

However, the IRS conducted fewer examinations, and its Collection Function continued to receive more delinquent accounts than it closed, the report concluded.

The overall objective of TIGTA’s audit was to provide various statistical information regarding Collection and Examination function activities.

"Budget reductions contributed to a decrease in the number of examinations and an increase in the number of delinquent taxes being assigned to an inactive status at the Internal Revenue Service last year," said J. Russell George, Treasury Inspector General for Tax Administration. "However, overall enforcement revenue increased in 2013, due, in part, to several large appeal case settlements."

The IRS’s appropriated budget decreased 7.4 percent between Fiscal Years (FY) 2010 and 2013, from $12.1 billion to $11.2 billion after sequestration, according to the report. The budget cuts resulted in reductions in the number of employees available to provide services to taxpayers and enforce the tax laws. Specifically, the number of full-time equivalents dropped by nearly 9 percent, from 94,618 at the end of FY 2010 to 86,310 at the end of FY 2013, including a 4 percent reduction between FYs 2012 and 2013. The number of enforcement personnel decreased by more than 1,000 employees during FY 2013.

Despite these challenges, total dollars received and collected (gross collections) increased for the third straight year to $2.9 trillion (a 13 percent increase) in FY 2013. Enforcement revenue collected also increased from $50.2 billion in FY 2012 to $53.3 billion in FY 2013, due, in part, to several large Appeals case settlements. Tax return filings continued to increase as did gross accounts receivable, which increased to $400 billion.

The FY 2013 Collection function activities showed mixed results. The amount collected on delinquent accounts by both the Automated Collection System and Field Collection decreased. The Collection function continued to receive more delinquent accounts than it closed, although the number of delinquent accounts in the Collection queue decreased, due in part to the shelving of millions of accounts that were not resolved. Fewer Notices of Federal Tax Lien were filed, fewer levies were issued, and fewer seizures were made. Meanwhile, taxpayers’ use of payment options such as offers in compromise increased.

The Examination function conducted 6 percent fewer examinations in FY 2013 than in FY 2012. The decline in examinations occurred across all tax return types, including individual, corporation, S corporation, and partnership.

TIGTA made no recommendations in this report. IRS officials were provided an opportunity to review the draft report and did not provide any comments.

Read the report.

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Note: The difference between the date TIGTA issues an audit report to the Internal Revenue Service and the date TIGTA publicly releases the report is due to TIGTA's internal review process to ensure that public release is in compliance with Federal confidentiality laws.

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