TIGTA Report on Collection and Examination Activities

Post Date: 9/18/19
Last Updated: 9/18/19


Cross References
- TIGTA 2019-30-063, September 9, 2019

The Treasury Inspector General for Tax Administration (TIGTA) has released its annual review of the IRS collection and examination activities for 2018. The overall objective of the report is to provide various statistical information about how the IRS focuses its compliance resources and the impact of those resources on revenue and compliance over time.

During fiscal year (FY) 2018, U.S. taxpayers filed more than 152 million individual and 11.4 million business income tax returns and forms. These filings resulted in the more than $3.4 trillion of total revenue collected during FY 2018. The challenges associated with implementing the Tax Cuts and Jobs Act of 2017 (TCJA) and declines in the number of IRS employees have not helped to ease the difficulties in enforcing the tax law. While the direct impact of the FY 2019 lapse in appropriations and government shutdown that lasted for 35 days may be difficult to quantify, the shutdown increased the challenges for the IRS in its efforts to administer the tax laws.

Over the past five years, the IRS' budget has increased approximately 2% to $11.4 billion in FY 2018 from $11.2 billion in FY 2014. In addition, the IRS ended FY 2018 with approximately 74,904 full time equivalents, a 4% decline from the 77,685 in FY 2017.

The IRS collected an all-time high amount of enforcement revenue of $59.4 billion in FY 2018. Over the past several years, increases in enforcement revenue have generally been due to an increase in returns filed with a balance due, which are largely handled through automated notices and other substantially automated programs. More than half of the total enforcement revenue collected in FY 2018 was collected within the collection automated notice stream ($30.2 billion).

The Automated Collection System supported the IRS' enforcement operations by collecting approximately $3.3 million per full-time equivalent in FY 2018, while revenue officers within the Field Collection function collected, on average, over $2.6 million each.

In FY 2018, the IRS identified 73.4 million taxpayers that failed to file a tax return, including 10.6 million individuals and 62.8 million businesses. Delinquencies associated with non-filers for tax year 2016, the most recent year estimated, were approximately $37.5 billion.

During FY 2018, 991,000 (less than 1%) returns were audited. The number of returns audited has declined 28% since FY 2014, when 1.4 million tax returns were audited by the IRS. This decline in examinations is the result of decreases in IRS staffing. From FY 2014 to FY 2018, the number of staff assigned to the IRS' Examination functions decreased 24%.

TIGTA made no recommendations in this report. IRS officials were provided an opportunity to review the draft report and did not provide a formal response.
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