IRS Announces Significant Boost In Enforcement Revenue

by Leroy Baker, Tax-News.com, Washington

22 November 2004

According to new data released last week by the US Internal Revenue Service, the number of audits carried out on wealthy taxpayers rose by 40% in the 2004 fiscal year compared to the previous year, whilst the audit rate on small business has dropped considerably.

The figures revealed that the total number of high income taxpayers examined by the IRS increased to over 195,000, compared with a total of 139,400 in the 2003 fiscal year, as enforcement revenue reached a record $43.1 billion.

High income taxpayers are defined in this case as those earning more than $100,000 per year.

For the first time since 1999, the total number of audits of individual taxpayers exceeded 1 million, a 19% increase on last year, and 36% more than in 2002.

Meanwhile, audits of large businesses – those with assets of $10 million or more – climbed for the first time in many years to over 9,500 from 7,125 last year.

IRS Commissioner Mark W. Everson, suggested that the figures are a sign that the IRS is turning the tide in the enforcement battle, and argued that the agency is representing value for money for the taxpayer.

“These results demonstrate funding the IRS is a sound investment,” he declared, continuing: “Compared against our overall budget of just over $10 billion, which includes all taxpayer service and education, our enforcement revenues yield a 4-1 direct return on every dollar invested in tax administration.”

Nevertheless, Everson expressed disappointment over the agency’s audit rate for small business taxpayers, which underwent a 46% drop (to 7,290 from 13,680)compared to last year on firms with assets of less than £10 million.

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