On March 25th, the IRS announced the release of their annual compilation of facts and statistics in their 2012 Revenue Service Data Book for fiscal year 2012. This report reveals information about returns filed, taxes collected, enforcement actions, taxpayer assistance, and the IRS budget and workforce. According to the report, the IRS has collected close to $2.5 trillion in federal revenue and processed 237 million returns. More than 120 million individual income tax return filers received a tax refund, totaling almost $322.7 billion.
In this period, the IRS examined 0.9 percent of all tax returns filed, 1.6 percent of all corporate filings and 1 percent of all individual income tax returns. Because the IRS enforcement budget fell to $5.3 billion in fiscal 2012 compared with $ 5.5 billion in 2011, IRS examination rates of individual tax returns declined across all income levels in this period. For those with incomes greater than $ 10 million, the audit rate was 27.37 percent in 2012, compared to 29.93 percent in 2011. Among taxpayers who earned more than $1million, 12.1 percent had their returns examined down from 12.5 percent the year before. For those who have an income more than $200,000 and less than $1 million, 2.8 percent were examined. Among taxpayers who earned less than $200,000, 0.4 percent were examined.
The failure to comply with Federal tax laws may result in civil penalties. During fiscal year 2012, the IRS assessed almost $26.9 billion in civil penalties. Slightly more than half of that amount, $13.6 billion, was assessed in civil penalties on individual, and estate and trust income returns. The IRS also abated over $11.3 billion in civil penalties during the year, including nearly $5.1 billion in abatements for individual, and estate and trust income tax returns. During this period, IRS initiated 5,125 criminal investigations in the areas of legal source tax crimes, illegal source financial crimes, and narcotic-related financial crimes.
IRS Acting Commissioner Steven T. Miller wrote in the report: “One of the biggest challenges confronting the IRS today is refund fraud caused by identity theft. The IRS has more than doubled the number of staff dedicated to preventing refund fraud and assisting taxpayers victimized by identity theft, with more than 3,000 employees working in this area.” As a result of these efforts, the IRS was able to prevent 3 million fraudulent refunds worth more than $20 billion.
The commissioner also revealed that the IRS has made significant progress on international enforcement, specifically against the illegal hiding of assets and income in offshore accounts. Miller said: “We have continued our two-pronged approach: offering a voluntary disclosure program for those who want to come in and get it right with the government, while at the same time pursuing tax evaders and the promoters and banks assisting them.”
In regards to tax-exempt activities, the IRS approved 52,615 organizations out of the total 60,793 applications for tax-exempt status and other determinations. The IRS recognized more than 1.6 million tax-exempt organizations and nonexempt charitable trusts. Overall, the number of tax-exempt organizations and nonexempt charitable trusts dropped by more than 13,000. Nonexempt charitable trusts were down by 3,000, or 2.26 percent.
As a Tax Attorney in Los Angeles, we understand the importance of tax audits. In fact, rates for IRS tax audits have been consistently increasing over the years. Taking into consideration the facts and statistics presented by the IRS, getting professional help by an experienced tax attorney should be priority moving into 2013. Only a tax controversy attorney can help in assisting you quickly and efficiently end your IRS audit.