The annual Internal Revenue Service (IRS) Data Book was recently released, offering a statistical look at the activities of the agency for the fiscal year beginning October 1, 2020, through September 30, 2021.
For those entranced by statistics, the 2021 IRS Data Book is a wealth of interesting information. In introducing the new resource, IRS Commissioner emphasized the role the agency has taken during the pandemic years, noting “the IRS was called on to provide economic relief during this national crisis while also fulfilling our agency's core responsibilities of tax administration; IRS employees answered Congress' call to deliver two more rounds of Economic Impact Payments and also implemented changes to the Earned Income Tax Credit, the Child Tax Credit, and other refundable credits as part of the American Rescue Plan. The breadth of these missions has strengthened my belief that a fully functioning IRS is critical to the success of our nation."
The Compliance Presence section of the report details efforts to enforce and promote tax compliance and deter tax fraud. Tools used in that regard include IRS civil and criminal tax audits, IRS criminal tax investigations, notices of math errors to taxpayers, and review and verification of reported information.
Some of the data findings in the report include:
- In 2020, the number of tax return math errors rose substantially due to the Recovery Rebate Credit. Overall, calculations around the credit made up almost 88 percent of all math errors. In 2019 and 2021, the most common math errors are those concerning adjusted gross and taxable income amounts.
- In the fiscal year 2021, the IRS completed 2,766 criminal tax investigations. The investigations focused on three areas. These include legal-source tax crime cases, which are industries and occupations that generate both legitimate income as well as tax crime. The second focus area is illegal-source cases, which as the name implies, arise from financial crimes such as tax evasion and money laundering. The third focus area is narcotics-related criminal tax matters.
- During the fiscal year, the IRS closed 738,959 tax return reviews. Additional taxes recommended as a result of the audits were approximately $26.8 billion.
- With regard to audits, only 1.8 percent (13,725) of the taxpayers involved did not agree with the findings of the IRS. The majority of 2021 audits (78.4 percent) were completed through correspondence while the remaining audits (21.6 percent) took place in the field.
The 2021 Data Book offers a deep dive into the activities of the IRS as it tries to maintain and serve its mandate on a highly limited budget. If you have any doubt about what the IRS is up to, the Data Book is a good place to start.
Trusted legal advice on tax litigation, IRS audits, and tax controversy
The tax attorneys at Robert J. Fedor, Esq., LLC help clients and companies locally and abroad respond to compliance challenges, allegations of tax crime, and other tax concerns. When you need knowledgeable legal advice, contact us or call 800-579-0997. We have offices in Cleveland and Chicago for your convenience.
