Believe it or not, recent reports have indicated that the IRS has actually collected less revenue through audits and other “enforcement” activities in recent years. Of course, that doesn’t mean an IRS audit or tax dispute is any less painful or costly, as anyone who has had the misfortune of going through an audit can attest.
Believe it or not, recent reports have indicated that the IRS has actually collected less revenue through audits and other “enforcement” activities in recent years. Of course, that doesn’t mean an IRS audit or tax dispute is any less painful or costly, as anyone who has had the misfortune of going through an audit can attest.
So why are audit revenues down? According to the IRS, a lack of funding has forced them to lay off thousands of employees, many of them “front line” agents who are responsible for conducting audits. As Forbes reports:
Enforcement revenue collected by the Internal Revenue Service has declined for the second straight year, according to a new report by the Treasury Inspector General for Tax Administration (TIGTA). Enforcement revenue collected declined by 9 percent in Fiscal Year 2012, from $55.2 billion to $50.2 billion. This has decreased in two straight years and is 13 percent less than the $57.6 billion collected in Fiscal Year 2010. The 13 percent reduction in enforcement revenue correlates to the 14 percent reduction in the number of enforcement personnel.
J. Russell George, the Treasury Inspector General for Tax Administration, noted that since Fiscal Year 2010, approximately 8,000 full-time IRS positions have been lost—about 5,000 from front-line enforcement personnel. The IRS continues to receive more new taxpayer delinquent accounts than it closes. The amount owed in the Queue (unassigned inventory) increased 22 percent in Fiscal Year 2011 ($56.2 billion) and 12 percent in Fiscal Year 2012 ($63.1 billion) and has grown 46 percent over the past five years.
The Examination function’s recent decrease in revenue agents and tax compliance officers contributed to an overall decrease in examinations. This reduction is attributable to decreased examinations of individual tax returns, TIGTA’s report found.
Naturally, the IRS isn’t happy with this state of affairs, and the agency has already requested a budget increase for the future. In the meantime, you can rest assured that IRS auditors will be working harder than ever at extracting money from taxpayers, no matter how painful the process may be.
If you’re facing an IRS dispute, we can help. We’ll deal directly with the IRS on your behalf so that you can spend your time living your life, not arguing the IRS. Contact us today to learn more!