The IRS Data Book is an annual event. It is a compendium of actions taken, returns filed (and not filed) and continuing evidence of the calcifying state of the underfunded federal agency for fiscal year 2018.
While the Data Book provides an at-a-glance view of the range of activities of the agency, including a summary of Taxpayer Attitudes, of high interest are the summaries and data concerning IRS criminal tax investigations and efforts taken to reduce tax crime.
Here are some highlights:
- During the fiscal year, the IRS netted over $55.5 billion in assessments on unpaid taxes along with additional amounts due. These are the type of fines levied when the IRS reviews your return, and finds that you owe more, or made more, than you reported. You are on the line for the amount underpaid plus sometimes stiff penalties for the initial underpayment. On top of that, the IRS collected another $13 billion for delinquent taxes.
- Offers in compromise were big this year. You may recall that an offer in compromise is a structured opportunity for a taxpayer to try and settle a tax liability for less than it is worth. In the 2018 fiscal year, US taxpayers made 59,000 offers in compromise to the IRS. The agency accepted less than half of those offers. Only 24,000 offers were allowed, and those netted about $261 million for federal coffers.
- Moving downstream from delinquent returns, the IRS assessed almost $30 billion in civil penalties assessed on individual, trust, and estate tax returns.
- Data on criminal tax investigations is always interesting if you are a criminal tax attorney, or if you wonder about beating the odds in a tax audit. The IRS categorizes criminal tax charges as “legal source tax crimes,” “illegal source financial crimes,” and drug-related tax crime. Overall, the IRS conducted 3,051 investigations of these crimes last year.
We work with clients concerned about their risk of audit, or an IRS criminal investigation. When a client receives a notice of audit for either their personal or corporate concerns, we are usually one of the first calls. It is worth noting that the new Data Book shows a continuing decline in the rate of audits, and an uptick in the number of audits conducted via correspondence. For taxpayers calculating their odds of audit, that is good news. It is hard not to attribute these continuing declines in audits, and investigations, to the necessity of reducing services in the face of a continually squeezed budget.
The agency is doing the best it can with what it has. For high wealth individuals, large enterprise, and some businesses, the risk of tax controversy continues to decline.
Skilled tax attorneys serving clients in Chicago and Cleveland
Robert J. Fedor, Esq., LLC provides experienced legal guidance and representation whether you or your company is challenged by notice of a civil tax audit, or offshore tax question. We deliver knowledgeable, discrete legal counsel to domestic and international clients. Contact us or call 800-579-0997 today.