During 2017, 245 million tax returns were processed by the IRS and more than $3.4 trillion in federal taxes was paid by individuals and businesses to the US Treasury. The cost of collecting $100 was 34 cents, the lowest cost in more than 70 years. The IRS issued over 121 million individual tax refunds totaling over $436 billion. For the first time, in 2017, IRS tracked “Taxpayer Behavior” based on a long-standing survey.
Taxpayer Behavior – 2 Taxpayer Assessment Questions:
⦁ What Is an Acceptable Amount to Cheat on Income Taxes? In 2017, most taxpayers (88%) continued to view cheating on their income taxes as not at all acceptable. This belief has remained stable, within a five-point range, since 2008.
⦁ It Is Every American’s Civic Duty to Pay Taxes? Nearly all taxpayers say it’s their civic duty to pay their “fair share” of taxes (67% completely agree and 28% mostly agree for a total of 95%). This attitude has remained stable, within a four-point range, since 2008.
Here are the Data Highlights of the IRS Tax Book for 2017
⦁ The IRS processed more than 245.4 million Federal tax returns and supplemental documents.
⦁ Almost 173 million returns and other forms were filed electronically. These represented almost 70.5 percent of all filings; an increase of 1.4 percent over the share of electronic filing in 2016.
⦁ Paid preparers filed almost 78.6 million tax returns electronically. Taxpayers filed more than 2.5 million returns using the IRS Free File program.
⦁ More than 15.5 million tax refunds included a refundable child tax credit. More than 23.3 million included a refundable earned income tax credit.
⦁ Texas had the largest total refunds in the following categories: business, estate and trust income, and excise taxes.
⦁ California had the largest total refunds in the following categories: individual, employment, estate, and gift taxes.
⦁ IRS examines (audits) returns to determine if income, expenses, and credits are reported accurately. The IRS enforces the tax law in a number of ways; the more common methods include correspondence (examination by mail) and field (face-to-face audit) examinations.
⦁ The IRS audited almost 1.1 million tax returns, approximately 0.5 percent of all returns filed in Calendar Year (CY) 2016.
⦁ The IRS audited 0.6 percent of all individual income tax returns filed in CY 2016, and 1.0 percent of corporation income tax returns (excluding S corporation returns).
⦁ IRS conducted the majority of Fiscal Year (FY) 2017 audits, 70.8 percent, via correspondence. The remaining 29.2 percent were conducted in the field.
⦁ Examinations protected a total of almost $3.7 billion in refund payments, of which $3.6 billion came from field examinations and $80.6 million from correspondence examinations.
⦁ IRS gathers independent information about income received and taxes withheld from information returns (Forms W-2 and 1099) filed by employers and other third parties.
⦁ With its Automated Underreporter Program (AUP), IRS matches W-2’s and 1099’s to tax returns and contacts Taxpayers to resolve discrepancies.
⦁ With the Automated Substitute for Return Program (ASRP), IRS uses W-2’s and 1099’s from third parties to identify non-filers, construct tax returns for certain non-filers based on that third-party information and then assess tax, interest and penalties based on the substitute returns.
⦁ IRS checks for math and clerical errors before refunds are issued in order to further verify the accuracy of the reported information.
⦁ IRS closed almost 3.3 million cases under the AUP resulting in nearly $6.7 Billion in additional assessments.
⦁ IRS closed 283 thousand cases under the ASRP resulting in $874 million in additional assessments.
⦁ Failure to comply with filing, reporting and payment requirements of the tax code may result in civil penalties or, in some cases, criminal investigation which may result in prosecution, fines and imprisonment.
⦁ IRS assessed more than $12.5 billion in additional taxes for returns not filed timely and collected more than $1.6 billion with delinquent returns.
⦁ Taxpayers proposed 62,000 offers in compromise to settle existing tax liabilities for less than the full amount owed. IRS accepted 25,000 offers, amounting to almost $256.0 million, during 2017.
⦁ IRS assessed $26.5 billion in civil penalties. More than $11.0 billion of civil penalties on individual, estate and trust income tax returns was assessed.
⦁ In 2017, IRS initiated 3,019 criminal investigations in the areas of: legal source tax crimes, illegal source financial crimes and narcotics related financial crimes.
⦁ Legal source tax crimes include investigations that involve activities, industries, and occupations that generate legitimate income as well as cases that may threaten the tax system (frivolous challenges to the tax system, unscrupulous tax return preparers and fraudulent refund schemes).
⦁ Illegal source financial crimes relate to the proceeds derived from unlawful sources other than narcotics (tax related violations & money laundering).
⦁ Narcotics related financial crimes relate to investigations of narcotics-related tax and money laundering schemes. IRS cooperates with the US Department of Justice and other law enforcement agencies to accomplish this mission.
Other Interesting 2017 IRS Facts
⦁ Women represented 65.5 percent of IRS and Chief Counsel Personnel.
⦁ The IRS used 76,832 full-time equivalent positions in conducting its work, a decrease of 14.9 percent from 2012.
⦁ IRS provided Taxpayer assistance through almost 495.6 million visits to IRS.GOV.
Don’t be victim of your own making
Although IRS has endured substantial budget and work force cuts, IRS has its eye on the “collections” ball. The Agency has recently benefited from Private Debt Collectors, Passport restrictions/cancellations, a stricter application process for an Offer in Compromise and the ability to “Self-Serve”. Although IRS is trying to become a “Self-Serve” agency, Taxpayers should travel the road with the assistance and supervision of a tax professional. The IRS collection process continues evolving.