December 8, 2006

IRS Statistics for Audit and Enforcement Rates

Houston Tax Attorney Blog

Houston Tax Attorney

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While the IRS does not release many of the factors that it uses to identify taxpayers for tax audits, the IRS does release general statistics that can help gauge a taxpayer’s audit potential.  These statistics help answer the question of “what are the chances of being audited?”

IRS Audit Rates

Looking at the most recent IRS statistics for fiscal year 2006, the general answer is that less than 1% of individual taxpayers were audited this year. The statistics also show six times the number of higher income taxpayers were audited than lower income earners. In addition, the statistics reveal that the IRS conducted three individual tax return audits for every one business tax return audit – with partnership and Subchapter S corporations being audited the least.

IRS Enforcement Actions

The IRS statistics go beyond audit data.  They also capture information about IRS enforcement actions, such as IRS liens and IRS levies.  These statistics show that the IRS’s enforcement actions have now exceeded pre-Revenue Restructuring Act levels.  The Revenue Restructuring Act was Congress’ attempt to put the breaks on aggressive and abusive actions in the late 1990s.

According to the statistics IRS criminal investigations have declined in the past three years, but the IRS conviction rate remains at over 90% and the average sentence is now over 20 years.

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