Last week the IRS released statistics regarding the 2007 fiscal year. Significant items in those statistics relate to who the IRS was auditing, how often the IRS filed liens, used levies and seized taxpayers’ property.
In the 2007 fiscal year:
1) The IRS collected $59.2 billion through audits, collection and document matching.
2) Audits of tax returns for taxpayers with incomes of $1 million or greater equaled 31,382.
3) Audits of tax returns for taxpayers with incomes of $200,000 or greater equaled 113,105.
4) Audits of tax returns for taxpayers with incomes of $100,000 or greater equaled 293,188.
5) Audits of tax returns for taxpayers with incomes of less than $100,000 equaled 1,091,375.
6) The IRS levied on the assets of 3,757,190 taxpayers
7) The IRS filed 683,659 liens
8) The IRS seized the assets of 676 taxpayers.
9) The IRS initiated 4,211 criminal investigations and 2,323 people were charged/indicted. The government had a 90.20% conviction rate.
The straight numbers don’t show that the number of audits of high income taxpayers has increased from prior years. In fact the IRS has deliberately pursued higher income taxpayers. However, the number of audits of taxpayers with less than $100,000 in income remains very high. Additionally, the number of liens and levies are higher than they have been in the last ten years. Seizures of taxpayer property are at the highest level they have been since 1998.
This means that the IRS is becoming more serious and effective in collecting taxes through its audit and enforcement procedures. The best ways to guard against additional tax, penalties and interest flowing from an audit is to have legal support for reporting positions at the time the tax return is filed and to retain adequate records to substantiate claimed deductions. If a taxpayer fails to do so, a skilled representative can help to reconstruct the legal and factual basis underlying a tax return, yet, this is not cost free. The best way to solve a tax problem is to avoid having the problem in the first place.
In the 2007 fiscal year:
1) The IRS collected $59.2 billion through audits, collection and document matching.
2) Audits of tax returns for taxpayers with incomes of $1 million or greater equaled 31,382.
3) Audits of tax returns for taxpayers with incomes of $200,000 or greater equaled 113,105.
4) Audits of tax returns for taxpayers with incomes of $100,000 or greater equaled 293,188.
5) Audits of tax returns for taxpayers with incomes of less than $100,000 equaled 1,091,375.
6) The IRS levied on the assets of 3,757,190 taxpayers
7) The IRS filed 683,659 liens
8) The IRS seized the assets of 676 taxpayers.
9) The IRS initiated 4,211 criminal investigations and 2,323 people were charged/indicted. The government had a 90.20% conviction rate.
The straight numbers don’t show that the number of audits of high income taxpayers has increased from prior years. In fact the IRS has deliberately pursued higher income taxpayers. However, the number of audits of taxpayers with less than $100,000 in income remains very high. Additionally, the number of liens and levies are higher than they have been in the last ten years. Seizures of taxpayer property are at the highest level they have been since 1998.
This means that the IRS is becoming more serious and effective in collecting taxes through its audit and enforcement procedures. The best ways to guard against additional tax, penalties and interest flowing from an audit is to have legal support for reporting positions at the time the tax return is filed and to retain adequate records to substantiate claimed deductions. If a taxpayer fails to do so, a skilled representative can help to reconstruct the legal and factual basis underlying a tax return, yet, this is not cost free. The best way to solve a tax problem is to avoid having the problem in the first place.
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