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)
|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)
|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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