The Internal Revenue Service stepped up its compliance activities last year and saw its revenues jump, according to a new report.
The percentage of tax returns examined by the IRS rose nearly 9 percent in fiscal year 2007 compared to fiscal year 2006, while revenue from IRS enforcement activities increased 22 percent to $59.2 billion in the same period, according to a report by the Treasury Inspector General for Tax Administration. The use of liens and levies by the IRS reached a 10-year high last year. Dollars collected on balance-due accounts rose nearly 3 percent last year.
The number of examinations of individual income tax returns has continuously increased since fiscal year 2000. That year, the IRS examined only 617,765 (or one out of every 202) individual income tax returns. In fiscal year 2007, the IRS ramped that up to 1,384,563 (or one of every 97) individual returns.
The picture was more complicated for business tax returns. The number of corporate income tax returns examined (excluding returns for foreign corporations and S corporations) rose by just over 4 percent in fiscal year 2007, following a 1 percent decline in fiscal year 2006. From fiscal year 1998 to 2007, the number of corporate tax examinations fell from 53,648 (one of every 48 returns filed) to 29,664 (one of every 75 returns filed), a 45 percent decline.
During fiscal year 2007, the number of corporate tax returns examined with assets of $10 million and greater decreased by almost 9 percent. However, examinations of the largest corporations (those with assets of $250 million and greater) decreased by nearly 20 percent in fiscal year 2007.
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