THE FULLERTON REPORT | JANUARY 2009
Fiscal Year 2008 Enforcement and Service Results
The IRS’s enforcement revenues declined by $2.8 billion in fiscal year (FY) 2008, statistics released on December 22 revealed. The IRS collected $56.4 billion from collection activities, audits and document matching, down almost 5 percent from FY 2007 revenue of $59.2 billion.
Deputy Commissioner Linda Stiff attributed the drop to a number of factors. Enforcement personnel declined by 2.2 percent, to 20,722 agents and officers, because of retirements and a flat budget, she indicated. To administer the economic stimulus program, the IRS shifted enforcement personnel to taxpayer service to deliver 117 million checks and respond to a “crush” of phone calls.
According to Stiff, the IRS held steady on key service and enforcement results. Correspondence audits of individuals increased to 1.08 million and face-to-face audits remained at 310,000. Some other measures of enforcement activity declined; others stayed even or increased. Audits of individuals increased by 7,000 (one-half of 1 percent), based on the increase in correspondence audits, but audit coverage of individuals declined from 1.03 percent to 1.01 percent. Audits of individuals with income under $200,000 declined by 11,000, or 1 percent, but audits of individuals with income of $200,000 and higher increased over 15 percent.
Business audits essentially held steady, but business filings increased by almost 460,000, primarily in the partnership and S corporation categories. Overall corporate audits increased slightly, to 30,000, and audit coverage of large corporations ($10 million or more in assets) was over 15 percent. However, audit coverage of partnerships and S corporations was less than one-half of 1 percent. Audits of tax-exempts increased by 4 percent, to almost 7,900, while filings increased to 890,000 returns.
Stiff said there will be continued emphasis on high-income individuals and the largest corporations. Priorities for 2009 will also include international transactions and employment taxes. Audit coverage of smaller corporations (under $50 million in assets) is not likely to increase, she indicated.
