While coping with a series of budget cuts and employee reductions in recent years, the Internal Revenue Service managed to increase the total dollars it received and collected for the third consecutive year, according to a new government report.

The report, from the Treasury Inspector General for Tax Administration, found that the IRS conducted fewer examinations, however, and its Collection Function continued to receive more delinquent accounts than it closed, the report concluded.

The IRS’s appropriated budget decreased 7.4 percent between fiscal years 2010 and 2013, from $12.1 billion to $11.2 billion after sequestration, according to TIGTA’s report. The budget cuts resulted in reductions in the number of IRS employees who were available to provide services to taxpayers and enforce the tax laws. 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, the 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.

“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,” TIGTA Inspector General J. Russell George in a statement. “However, overall enforcement revenue increased in 2013, due, in part, to several large appeal case settlements.”

The FY 2013 Collection function activities showed mixed results, according to the report. 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 IRS’s 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 the report. IRS officials were provided an opportunity to review the draft report and did not provide any comments.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access