from www.irs.gov
Fiscal Year 2007 Enforcement and Services Results
The IRS continues to make strong progress in a number of key enforcement areas. The IRS is showing consistent improvements in areas critical to maintaining a fair, efficient tax system while bringing billions of additional dollars into the Treasury. At the same time, the agency continues to improve service to taxpayers.
The IRS enforcement efforts increased again in fiscal year 2007. For instance, during 2007 the IRS audited 84 percent more returns of individuals with incomes of $1 million or more than during 2006. Overall, enforcement revenue reached $59.2 billion, up from $48.7 billion in 2006 and nearly $34.1 billion in 2002.
Highlights of the enforcement and services numbers for fiscal year 2007, which ended on September 30, include:
Individuals
Audit rates increased in 2007, both for overall individual rates and for higher-income taxpayers.
Audits of individuals with incomes of $1 million or more increased from 17,015 during fiscal year 2006 to 31,382 during fiscal year 2007, an increase of 84 percent. One out of 11 individuals with incomes of $1 million or more faced an audit in 2007.
Overall, the total individual returns audited increased by 7 percent to 1,384,563 in 2007 from 1,293,681 in 2006. That’s the highest number since 1998.
Audits of individuals with incomes over $200,000 reached 113,105 returns, up 29.2 percent from the prior year total of 87,885.
The IRS increased audits of individual returns with income of $100,000 or more, auditing 293,188 of these returns in 2007, up 13.7 percent from last year’s total of 257,851.
The IRS filed 3.8 million levies and almost 700,000 liens during 2007, an increase from the previous year and a substantial increase from five years earlier.
Businesses
In the business arena, the IRS continued efforts to review more returns of flow-through entities – partnerships and S Corporations. Our business numbers reflect that we have placed more emphasis in the growing area of these flow-through returns. While large corporate audits are down slightly, we have increased our focus on mid-market corporations – those with assets between $10 million and $50 million dollars. The IRS enforcement budget in 2007 was similar to the budget in 2006, and in times of flat budgets, the agency cannot increase activity across the board but must address the areas where there is growth and potential risk.
Audits of S Corporations increased to 17,681 during 2007, up 26 percent from the prior year’s total of 13,984.
Audits of partnerships increased to 12,195 during 2007, up almost 25 percent from the prior year’s total of 9,777.
Audits of mid-market corporations increased to 4,473, up 6 percent from last year’s total of 4,218.
Audits of businesses in general rose to 59,516, an increase of almost 14 percent from the prior year’s total of 52,223.
Although the audits of large corporations dipped slightly in 2007 to 9,644 audits, the number of audits is up 14 percent from the fiscal year 2002 level.
Taxpayer Services
More taxpayers chose to file electronically in 2007 than during the prior year, with 57 percent of individual tax filers choosing to e-file in 2007, up from 54 percent in 2006.
More people visited the IRS internet site, IRS.gov. The IRS site was accessed more than 217 million times in 2007, up more than 10.5 percent from the same period in 2006.
The IRS helped more taxpayers find out about their refunds through the agency’s internet-based system ‘Where’s my Refund?’ The system was accessed 32.1 million times during 2007, up 30 percent from last year’s usage of 24.7 million.
As in the prior year, the IRS accuracy was 91 percent on tax law questions answered through its toll-free telephone service.
The agency held a 94 percent customer satisfaction rating for its toll-free telephone service.
More detailed information is available in the FY 2007 IRS Enforcement and Services Tables and the FY 2007 Enforcement Revenue and Individual Audits Chart.
Thursday, January 17, 2008
IRS audits of millionaires on the rise.
from the AP newswire.
IRS audits of millionaires on the rise
Associated Press
.
Jim Abrams
January 17, 2008
Associated Press Writer / January 17, 2008
WASHINGTON—There's at least one advantage to not being a millionaire -- less chance of being audited by the Internal Revenue Service.
The tax agency said Thursday that in the 2007 budget year it audited one out of every 11 with incomes of $1 million or more. Among those with incomes of $100,000 or less, 99 out of every 100 escaped further IRS scrutiny.
Still, the IRS said its auditing rates were generally up for people of all income levels. The rates were 9.25 percent for those with incomes of more than $1 million, up from 6.3 percent in 2006; 2.87 percent for those with incomes above $200,000, up from 2.57 percent; and 0.93 percent for those earning under $100,000, compared to 0.89 percent the previous year.
Overall, the IRS looked at 1,384,563 returns in fiscal 2007, 1.03 percent of the total individual returns of 134.4 million in the previous calendar year. The audit rate was up 7 percent from the previous year.
There were 31,382 audits of those with $1 million incomes, up 84 percent from the 17,015 audited in 2006.
On the business side, the IRS said the audit focus was on partnerships and mid-market corporations, those with assets between $10 million and $50 million.
The returns of 59,516 businesses were audited in 2007, 0.66 percent of the total and compared to 52,223 in 2006. About one out of six large corporations with assets of $10 million and higher was audited, 9,644 out of 57,357, were audited, down slightly from the previous year.
The tax agency said its enforcement budget in 2007 was largely unchanged from 2006, so it had to focus on areas of growth and potential risk.
It said enforcement revenues in fiscal 2007, from collections and appeals activities, were $59.2 billion, up from $48.7 billion the previous year.
The IRS also noted that 57 percent of individual tax filers filed electronically last year, up from 54 percent in 2006.
© Copyright 2008 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
More from Boston.com
IRS audits of millionaires on the rise
Associated Press
.
Jim Abrams
January 17, 2008
Associated Press Writer / January 17, 2008
WASHINGTON—There's at least one advantage to not being a millionaire -- less chance of being audited by the Internal Revenue Service.
The tax agency said Thursday that in the 2007 budget year it audited one out of every 11 with incomes of $1 million or more. Among those with incomes of $100,000 or less, 99 out of every 100 escaped further IRS scrutiny.
Still, the IRS said its auditing rates were generally up for people of all income levels. The rates were 9.25 percent for those with incomes of more than $1 million, up from 6.3 percent in 2006; 2.87 percent for those with incomes above $200,000, up from 2.57 percent; and 0.93 percent for those earning under $100,000, compared to 0.89 percent the previous year.
Overall, the IRS looked at 1,384,563 returns in fiscal 2007, 1.03 percent of the total individual returns of 134.4 million in the previous calendar year. The audit rate was up 7 percent from the previous year.
There were 31,382 audits of those with $1 million incomes, up 84 percent from the 17,015 audited in 2006.
On the business side, the IRS said the audit focus was on partnerships and mid-market corporations, those with assets between $10 million and $50 million.
The returns of 59,516 businesses were audited in 2007, 0.66 percent of the total and compared to 52,223 in 2006. About one out of six large corporations with assets of $10 million and higher was audited, 9,644 out of 57,357, were audited, down slightly from the previous year.
The tax agency said its enforcement budget in 2007 was largely unchanged from 2006, so it had to focus on areas of growth and potential risk.
It said enforcement revenues in fiscal 2007, from collections and appeals activities, were $59.2 billion, up from $48.7 billion the previous year.
The IRS also noted that 57 percent of individual tax filers filed electronically last year, up from 54 percent in 2006.
© Copyright 2008 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
More from Boston.com
Wednesday, January 16, 2008
IRS Names Four New Frivolous Claims to Avoid
from www.irs.gov
IR-2008-8, Jan. 14, 2008
WASHINGTON — The Internal Revenue Service today issued a notice that lists four additional erroneous legal positions that taxpayers should refrain from using as an excuse to avoid paying their taxes.
An individual or group may not avoid paying their fair share of taxes by making “frivolous” legal arguments such as those listed in this notice. The IRS publicizes these frivolous claims to help taxpayers understand the law and avoid penalties.
Notice 2008-14 lists positions identified as frivolous for purposes of the penalty under section 6702 of the federal tax code for filing a frivolous tax return or submitting to the IRS a frivolous request for a collection due process hearing or application for an installment agreement, offer-in-compromise, or Taxpayer Assistance Order.
Taxpayers who file a tax return or make a submission based on a position listed in this notice are subject to a $5,000 penalty. This notice adds to the positions listed in Notice 2007-30, 2007-14 I.R.B. 883. The positions that have been added are found in paragraphs 9(g), 11, 14, and 25.
The four new frivolous claims pertain to the following:
Misinterpretation of the 9th Amendment to the U.S. Constitution regarding objections to military spending.
Erroneous claims that taxes are owed only by persons with a fiduciary relationship to the United States or the IRS.
A nonexistent “Mariner’s Tax Deduction” (or the like) related to invalid deductions for meals.
Certain instances of misuse or excessive use of the section 6421 fuels credit.
In 2006, Congress increased the penalty for frivolous tax returns from $500 to $5,000. The increased penalty amount applies when a person submits a tax return or other specified submission, and any portion of the submission is based on a position the IRS identifies as frivolous.
Notice 2008-14 along with additional information providing the truth about frivolous arguments can be found on IRS.gov.
IR-2008-8, Jan. 14, 2008
WASHINGTON — The Internal Revenue Service today issued a notice that lists four additional erroneous legal positions that taxpayers should refrain from using as an excuse to avoid paying their taxes.
An individual or group may not avoid paying their fair share of taxes by making “frivolous” legal arguments such as those listed in this notice. The IRS publicizes these frivolous claims to help taxpayers understand the law and avoid penalties.
Notice 2008-14 lists positions identified as frivolous for purposes of the penalty under section 6702 of the federal tax code for filing a frivolous tax return or submitting to the IRS a frivolous request for a collection due process hearing or application for an installment agreement, offer-in-compromise, or Taxpayer Assistance Order.
Taxpayers who file a tax return or make a submission based on a position listed in this notice are subject to a $5,000 penalty. This notice adds to the positions listed in Notice 2007-30, 2007-14 I.R.B. 883. The positions that have been added are found in paragraphs 9(g), 11, 14, and 25.
The four new frivolous claims pertain to the following:
Misinterpretation of the 9th Amendment to the U.S. Constitution regarding objections to military spending.
Erroneous claims that taxes are owed only by persons with a fiduciary relationship to the United States or the IRS.
A nonexistent “Mariner’s Tax Deduction” (or the like) related to invalid deductions for meals.
Certain instances of misuse or excessive use of the section 6421 fuels credit.
In 2006, Congress increased the penalty for frivolous tax returns from $500 to $5,000. The increased penalty amount applies when a person submits a tax return or other specified submission, and any portion of the submission is based on a position the IRS identifies as frivolous.
Notice 2008-14 along with additional information providing the truth about frivolous arguments can be found on IRS.gov.
Thursday, January 10, 2008
Advocate: IRS should pay if it delays a taxpayer
from www.boston.com
New York Times News Service / January 10, 2008
Taxpayers who endure excessive expense or drain on their time when the Internal Revenue Service mishandles a case should receive "apology payments" of up to $1,000 each, the National Taxpayer Advocate told Congress yesterday.
more stories like this
The advocate, a position Congress created in 1998, also said a new taxpayer bill of rights should be enacted, one that requires taxpayers to conduct themselves honestly and to cooperate with auditors and tax collectors.
Nina E. Olson, the taxpayer advocate, also said the IRS could use technology to apply the tax system to the underground or cash economy, where small entrepreneurs work for unreported pay.
She said that by tracking credit card spending, state sales tax reports, and other records, the IRS could identify who collects this cash.
Olson estimated the IRS could collect $100 billion more each year from those who evade taxes by dealing in unreported cash. That would be enough for honest taxpayers to receive a 10 percent cut in their income tax bills.
The proposed apology payments of $100 to $1,000, adjusted for inflation, would go to taxpayers who endure "excessive expense or undue burden" on their time. Britain and Australia already make such payments. The money would not be subject to tax.
"A fair and just tax system should acknowledge IRS mistakes and delays" in resolving issues, Olson said. She proposed that her office have the authority to authorize such payments up to $1 million a year.
Olson also told Congress that the use of private debt collectors is costing more than the money brought in. Private debt collection "is failing in most respects," she said.
She also said that the IRS had become much too aggressive in charging fees. One manager of a nonprofit organization who asked how to list some unusual income on its tax return was told that an answer would cost $2,700.
The IRS had expected private companies to collect $88 million but has now lowered that to as little as $23 million. The collectors are paid almost a fourth of the money they bring in.
If Congress authorized more money for IRS staff and equipment, the agency said it could bring in $20 for each dollar it receives, five times the Bush administration's official estimate of private debt collector efficiency.
Republicans oppose hiring more IRS workers, and the administration favors private collection even though it acknowledged it is far less efficient than having the IRS handle collections.
But the proposal most likely to draw opposition is one that would require partnerships, limited liability companies, and S corporations - all of which pass tax obligations on to their owners - to report more about their income.
© Copyright 2008 Globe Newspaper Company.
New York Times News Service / January 10, 2008
Taxpayers who endure excessive expense or drain on their time when the Internal Revenue Service mishandles a case should receive "apology payments" of up to $1,000 each, the National Taxpayer Advocate told Congress yesterday.
more stories like this
The advocate, a position Congress created in 1998, also said a new taxpayer bill of rights should be enacted, one that requires taxpayers to conduct themselves honestly and to cooperate with auditors and tax collectors.
Nina E. Olson, the taxpayer advocate, also said the IRS could use technology to apply the tax system to the underground or cash economy, where small entrepreneurs work for unreported pay.
She said that by tracking credit card spending, state sales tax reports, and other records, the IRS could identify who collects this cash.
Olson estimated the IRS could collect $100 billion more each year from those who evade taxes by dealing in unreported cash. That would be enough for honest taxpayers to receive a 10 percent cut in their income tax bills.
The proposed apology payments of $100 to $1,000, adjusted for inflation, would go to taxpayers who endure "excessive expense or undue burden" on their time. Britain and Australia already make such payments. The money would not be subject to tax.
"A fair and just tax system should acknowledge IRS mistakes and delays" in resolving issues, Olson said. She proposed that her office have the authority to authorize such payments up to $1 million a year.
Olson also told Congress that the use of private debt collectors is costing more than the money brought in. Private debt collection "is failing in most respects," she said.
She also said that the IRS had become much too aggressive in charging fees. One manager of a nonprofit organization who asked how to list some unusual income on its tax return was told that an answer would cost $2,700.
The IRS had expected private companies to collect $88 million but has now lowered that to as little as $23 million. The collectors are paid almost a fourth of the money they bring in.
If Congress authorized more money for IRS staff and equipment, the agency said it could bring in $20 for each dollar it receives, five times the Bush administration's official estimate of private debt collector efficiency.
Republicans oppose hiring more IRS workers, and the administration favors private collection even though it acknowledged it is far less efficient than having the IRS handle collections.
But the proposal most likely to draw opposition is one that would require partnerships, limited liability companies, and S corporations - all of which pass tax obligations on to their owners - to report more about their income.
© Copyright 2008 Globe Newspaper Company.
Friday, January 4, 2008
IRS may curb loans against tax refunds
from www.latimes.com
IRS may curb loans against tax refunds
The agency suspects that some tax preparers may inflate refunds to increase the size of the loans they make, and thus their fees.
By Kathy M. Kristof, Los Angeles Times Staff Writer January 4, 2008
The Internal Revenue Service said Thursday that it was considering curbing tax refund loans offered by tax preparers such as H&R Block Inc. and Jackson Hewitt Tax Service Inc. More than 12 million people take out such loans each year to in effect get advances against their refunds, according to a study by consumer groups, which have long criticized the fees on the loans as excessive. The IRS suspects that some preparers may be inflating refunds to increase the size of the loans they make."A preparer who inappropriately inflates the amount of a refund is able, directly or indirectly . . . to collect a higher fee," the IRS said in a notice seeking public comment about the potential refund-loan regulations, which would not go into effect until next year. The news slammed the stocks of the two big tax preparers. Jackson Hewitt plunged $7.26, or 23%, to $24.13, a two-year low. H&R Block slumped 86 cents, or 4.6%, to $17.75.Kansas City, Mo.-based H&R Block said its tax preparers were compensated without regard to the amount of refund loans made and therefore had no incentive other than to serve the interests of clients. Executives at Parsippany, N.J.-based Jackson Hewitt did not return calls seeking comment.Refund loans generated $192.4 million in revenue for H&R Block last year, up from $177.9 million the year before, a spokesman said. A taxpayer typically signs up for a refund loan when having his or her taxes done and receives the money two days later. One or two weeks after that, when the expected refund comes in, the loan is paid off. The loans "provide refund money in 48 hours instead of eight to 15 days," H&R Block spokesman Dan Smith said. "People can't always wait eight to 15 days to get their money."But consumer advocates say the loans not only are usurious but also are marketed to the most vulnerable of taxpayers: low-income parents claiming a special tax break for the working poor. H&R Block, which reduced its fees on refund loans last year under an agreement with consumer groups, currently charges an interest rate of 39% a year on its refund loans. But because the loans are so short-term, the cost averages about 2% of the loan amount, or less than the typical fee on a credit-card advance, the company said.For example, the fee on a $3,000 refund loan from Block averages $62, Smith said.Jean Ann Fox, director of financial services for Consumer Federation of America, called the IRS' action a step in the right direction. But she said the agency should have formally proposed a rule Thursday rather than just say it was thinking about it. "This is an expensive, unnecessary product," she said. "The folks who are having trouble making ends meet don't need to share their refund with the bank and a tax preparer." The move being considered by the IRS would bar tax preparation firms from sharing taxpayer return information with lenders, even with the consumer's consent. That would be a detriment to taxpayers who want the loans, H&R Block's Smith said.Without refund loans, he said, "taxpayers may still need funds quickly but may be forced to use higher-cost lenders -- assuming they even have access to credit -- since they will not have the ability to secure their loan with a tax refund." The IRS proposal now undergoes a public comment period, which lasts until early April. After that, the rule can be revised and then formalized. It then would need to go through another comment period. That makes it unlikely that any rule would go into effect until sometime next year, if at all."We are not making a definitive statement here," said David Williams, director of electronic tax administration for the IRS."We are trying to determine whether there is a problem, and if there is a problem, whether this would be a way to solve it."kathy.kristof@latimes.com
IRS may curb loans against tax refunds
The agency suspects that some tax preparers may inflate refunds to increase the size of the loans they make, and thus their fees.
By Kathy M. Kristof, Los Angeles Times Staff Writer January 4, 2008
The Internal Revenue Service said Thursday that it was considering curbing tax refund loans offered by tax preparers such as H&R Block Inc. and Jackson Hewitt Tax Service Inc. More than 12 million people take out such loans each year to in effect get advances against their refunds, according to a study by consumer groups, which have long criticized the fees on the loans as excessive. The IRS suspects that some preparers may be inflating refunds to increase the size of the loans they make."A preparer who inappropriately inflates the amount of a refund is able, directly or indirectly . . . to collect a higher fee," the IRS said in a notice seeking public comment about the potential refund-loan regulations, which would not go into effect until next year. The news slammed the stocks of the two big tax preparers. Jackson Hewitt plunged $7.26, or 23%, to $24.13, a two-year low. H&R Block slumped 86 cents, or 4.6%, to $17.75.Kansas City, Mo.-based H&R Block said its tax preparers were compensated without regard to the amount of refund loans made and therefore had no incentive other than to serve the interests of clients. Executives at Parsippany, N.J.-based Jackson Hewitt did not return calls seeking comment.Refund loans generated $192.4 million in revenue for H&R Block last year, up from $177.9 million the year before, a spokesman said. A taxpayer typically signs up for a refund loan when having his or her taxes done and receives the money two days later. One or two weeks after that, when the expected refund comes in, the loan is paid off. The loans "provide refund money in 48 hours instead of eight to 15 days," H&R Block spokesman Dan Smith said. "People can't always wait eight to 15 days to get their money."But consumer advocates say the loans not only are usurious but also are marketed to the most vulnerable of taxpayers: low-income parents claiming a special tax break for the working poor. H&R Block, which reduced its fees on refund loans last year under an agreement with consumer groups, currently charges an interest rate of 39% a year on its refund loans. But because the loans are so short-term, the cost averages about 2% of the loan amount, or less than the typical fee on a credit-card advance, the company said.For example, the fee on a $3,000 refund loan from Block averages $62, Smith said.Jean Ann Fox, director of financial services for Consumer Federation of America, called the IRS' action a step in the right direction. But she said the agency should have formally proposed a rule Thursday rather than just say it was thinking about it. "This is an expensive, unnecessary product," she said. "The folks who are having trouble making ends meet don't need to share their refund with the bank and a tax preparer." The move being considered by the IRS would bar tax preparation firms from sharing taxpayer return information with lenders, even with the consumer's consent. That would be a detriment to taxpayers who want the loans, H&R Block's Smith said.Without refund loans, he said, "taxpayers may still need funds quickly but may be forced to use higher-cost lenders -- assuming they even have access to credit -- since they will not have the ability to secure their loan with a tax refund." The IRS proposal now undergoes a public comment period, which lasts until early April. After that, the rule can be revised and then formalized. It then would need to go through another comment period. That makes it unlikely that any rule would go into effect until sometime next year, if at all."We are not making a definitive statement here," said David Williams, director of electronic tax administration for the IRS."We are trying to determine whether there is a problem, and if there is a problem, whether this would be a way to solve it."kathy.kristof@latimes.com
Subscribe to:
Posts (Atom)
