Dating back to 2000, the Internal Revenue Service has continued to take steps towards reversing several noncompliance trends that took hold in the 1990s.According to the Treasury Inspector General for Tax Administration, compliance activities increased and results improved during the IRS’s 2006 fiscal year as the agency continues to make greater use of collection enforcement tools. Last year, enforcement revenue collected continued to increase (to $48.7 billion), although the total dollar amount of uncollected liabilities did increase, to $271 billion.
The inspector general said that while the IRS collected 5.5 percent more dollars than 2005, both the number of taxpayers (779,272) and the amount owed ($27.2 billion) on accounts in the collection pipeline was at a 10-year high -- though the report offered a number of explanations for those figures.
The overall percentage of tax returns examined by the IRS increased about 4 percent in 2006, while the number of field examiners increased about 9 percent -- however, the overall percentage of tax returns examined is still 27 percent lower than it was for the 1997 fiscal year.
TIGTA’s report did find that while the number of individual tax returns examined increased, but 82 percent were conducted via correspondence audits. The inspector general has repeatedly complained that such examinations are usually not as comprehensive as face to face audits. And while the number of corporate tax returns examined remained largely the same when reviewing year-over-year figures (after an increase of more than 70 percent a year ago), the number of those examinations has decreased nearly 60 percent since 1997.
Finally, the report also noted that while the IRS added collection and examination staff during the past year, budget constraints will likely rule out new hires for the 2007 fiscal year.
The full report, “Trends in Compliance Activities Through Fiscal Year 2006,” is available online, at www.ustreas.gov/tigta/auditreports/2007reports/200730056fr.pdf.
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