Table 17a of the IRS 2019 Data Book (fiscal year October 1, 2018 to September 30, 2019) gives us statistical insights into IRS audit activities for a number of years. It classifies individual returns by income level and details returns filed, examined and the examination percentage. Two quick longitudinal analyses reveal that from 2013 to 2015 examination rates and numbers generally fell across the years in income classifications with a few exceptions. But from 2016 to 2018, examination rates and numbers fell across the years in income classifications significantly without exception.

ANALYSIS 1-EXAMINATION RATES (Percentage Covered column in Table 17a)

ANALYSIS 1	2018	2017	2016	2015	2014	2013
TABLE 17a-Examination Coverage Percentage by Return Size (Individual)	Percentage Covered	Percentage Covered	Percentage Covered	Percentage Covered	Percentage Covered	Percentage Covered
Individual Income Tax Returns, Total	0.15	0.33	0.46	0.57	0.58	0.64
No Total Positive Income	0.31	1.11	2.98	4.47	7.52	12.68
$1 under $25,000	0.28	0.53	0.64	0.66	0.71	0.83
$25,000 under $50,000	0.13	0.21	0.36	0.40	0.42	0.35
$50,000 under $75,000	0.08	0.18	0.33	0.53	0.42	0.33
$75,000 under $100,000	0.06	0.22	0.37	0.49	0.38	0.41
$100,000 under $200,000	0.05	0.25	0.43	0.47	0.40	0.52
$200,000 under $500,000	0.03	0.25	0.51	0.55	0.56	0.83
$500,000 under $1,000,000	0.03	0.51	1.08	1.13	1.14	1.48
$1,000,000 under $5,000,000	0.05	0.96	2.12	2.39	2.65	3.15
$5,000,000 under $10,000,000	0.04	1.48	3.91	4.39	5.24	6.40
$10,000,000 or more	0.03	2.6	6.49	8.16	8.67	12.06

These numbers represent total returns (closed and in-process) examined for each income classification as a percentage of the total number of returns filed for the tax year for that classification.

ANALYSIS 1 reveals that from 2013 to 2015, examination rates generally fell across the years in income classifications with the exceptions highlighted in red.

From 2016 to 2018, ANALYSIS 1 reveals that examination rates fell significantly across the years in income classifications without exception.

ANALYSIS  2-EXAMINATION NUMBERS (Closed and In Process columns in Table 17a)

ANALYSIS 2	2018	2017*	2016*	2015*	2014*	2013*
TABLE 17a-Returns Examined by Return Size (Individual)	Returns Examined	Returns Examined	Returns Examined	Returns Examined	Returns Examined	Returns Examined
Individual Income Tax Returns, Total	226,613	507,782	741,695	851,039	848,682	938,120
No Total Positive Income	1,998	7,744	20,413	31,329	49,829	78,573
$1 under $25,000	137,429	277,593	338,404	357,410	390,799	464,856
$25,000 under $50,000	47,720	74,364	129,910	141,727	147,805	121,841
$50,000 under $75,000	16,501	37,641	67,646	108,219	82,822	63,700
$75,000 under $100,000	8,627	29,580	48,591	64,324	49,717	52,852
$100,000 under $200,000	11,297	52,708	84,387	92,124	73,729	90,236
$200,000 under $500,000	2,376	16,832	30,672	31,804	29,884	40,290
$500,000 under $1,000,000	400	5,635	10,562	10,898	10,362	11,802
$1,000,000 under $5,000,000	243	4,601	8,844	10,244	10,651	10,782
$5,000,000 under $10,000,000	15	510	1,129	1,367	1,512	1,499
$10,000,000 or more	7	574	1,137	1,593	1,572	1,689

These numbers  include  examinations that were closed as of the end of the September 30 year. It also includes examinations that were in an open examination status.

In the 2018 Table 17a, both Closed and In Process numbers are presented as a total in one column so it’s easy to trace.

* In 2013 to 2017 Table 17a, Closed and In Process numbers appear in separate columns and were added together for the analysis. They can be traced by adding the two columns together.

ANALYSIS 2 reveals that from 2013 to 2015, examination numbers went up in a few classifications in 2014. And examination numbers went up in a majority of classification in 2015. Increases are highlighted in red.

From 2016 to 2018, ANALYSIS 2 reveals that examination numbers fell significantly across the years in income classifications without exception.

Both ANALYSES 1 & 2 for 2018 reveal that the lower end of the income classifications suffered greater audits.

SO, what happened from 2016 to 2018?

For the IRS 2019 Data Book, see https://www.irs.gov/pub/irs-pdf/p55b.pdf

 

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