The Internal Revenue Service has released its statistical report for the fiscal year 2013 (FY2013), “Enforcement and Service Results”, which provides data related to the IRS audit, collection, and enforcement activities. The report covers the period from October 1, 2012 through September 30, 2013.
Although the IRS conducted less collection activities, such as levies, liens and seizures, the agency collected more tax revenue than during the fiscal year 2013. The number of examination decreased compared to the prior year, however, the number of criminal investigations and prosecutions have increased.
The audit rate for individual tax returns in fiscal year 2013 was 0.96%, the lowest such rate since 2006. The total number of audits was 1.4 million, with over 1 million of that number representing “correspondence” audits. For taxpayers with income of under $200,000, the FY2013 audit rate was 0.88% (as comparied to 1.04% in FY2010, 1.02% in FY2011, and 0.94% in FY2012). For taxpayers with income between $200,000 and $1 million, the audit rate dropped to 3.26% (as compared to 3.93% in FY2011 and 3.70% in FY2012). For taxpayers with income in excess of $1 million, the audit rate in FY2013 again decreased, to 10.85% (as compared to 12.48% in FY2011 and 12.14% in FY2012).For businesses, the audit rate also declined. For all entity returns, the FY2013 audit rate was 0.61% (as compared to 0.63% in FY2011 and 0.71% in FY2012). Audit rates based on business categories were as follows:
- Small corp returns (assets under $10 million): 0.95% (FY2012 1.12%)
- Large corp returns (assets over $10 million): 15.84% (FY2012 17.78%)
- S corp returns: 0.42% (FY2012 0.48%)
- Partnership returns: 0.42% (FY2012 0.47%)
The IRS collected over $53 billion in “enforcement revenue” in FY 2013, which includes taxes, interest, and penalties. This was an increase over FY2012 ($50 billion). However, in FY2013, the IRS undertook fewer collection activities, mostly due to budget and staffing reductions. The IRS conducted 1.8 million levies (compared to 2.9 million in FY2012); filed 602,005 tax liens (compared to 707,768 in FY2012); and did 547 seizures (compared to 733 in FY2012)
On the criminal investigation side, the statistics show an increase in the IRS enforcement activity. In FY2103, the number of recommended criminal prosecutions increased to 4,364, as compared to 3,701 in FY2012. The overall conviction rate for tax and tax-related cases remained at 93.1%. The average jail sentence for tax and tax-related case also remained flat, at 31 months. Finally, the total number of criminal investigations initiated in FY2013 increased to 5,314 (as compared to 5,125 in FY2012) and the total number of taxpayers who were criminally charged in FY2013 increased, to 3,865 (as compared to 3,390 in FY2012).