1.13.1  Statistical Reporting Overview

1.13.1.1  (04-25-2005)
Statistical Reporting Overview

  1. This chapter sets forth information regarding

    • The statistical programs and services of the Statistics of Income (SOI) Division, and

    • Operating information of a procedural nature

  2. Most of the programs are in fulfillment of the statutory requirement for statistics on the operation of the tax law.

  3. The Division also performs related research and other statistical functions needed to meet this requirement. In addition, it assists in the quality measurement programs of the Service. Implementation of programs occurs in the

    • National Office

    • Service centers

    • Martinsburg Computing Center

    • Detroit Computing Center.

  4. The Division also furnishes technical guidance and direction to the service centers, Martinsburg Computing Center, and Detroit Computing Center in order to implement the SOI programs. Such guidance may be related to

    • Any phase of the statistical work, including the identification of problems and the development of solutions, and often requires written procedures, including those necessary for the selection of samples.

  5. To assure that program implementation is correct, the Division evaluates the SOI work performed by the service centers through

    • Quality assurance programs

    • Internal audit reports, and

    • On-site reviews of the SOI field processing operation.

  6. In addition to the regular SOI programs, the Division undertakes special statistical studies based on tax returns or performs certain functions related to statistical studies, often on a reimbursable basis. In the latter capacity, it participates as a liaison with Federal agencies authorized to receive tax return information for statistical use.

1.13.1.2  (04-25-2005)
Statistics of Income

  1. The major programs of the Statistics of Income Division are the various statistical studies that comprise the Statistics of Income program.

1.13.1.3  (04-25-2005)
Authority

  1. Beginning with 1916, the SOI series of reports and publications has been prepared in accordance with a provision in the applicable revenue act or in the Internal Revenue Code. The current authorization, in section 6108 (Statistical Publications and Studies) of the Internal Revenue Code of 1986, reads as follows:

    1. Section 6108(a) - Publication or Other Disclosure of Statistics of Income. The Secretary shall prepare and publish not less than annually statistics reasonably available with respect to the operations of the internal revenue laws, including classifications of taxpayers and of income, the amounts claimed or allowed as deductions, exemptions, and credits, and any other facts deemed

1.13.1.4  (04-25-2005)
Purpose

  1. The major products of the SOI Division are the annual SOI reports compiled from individual and corporation income tax returns. The tabulations most frequently used are:

    • Individuals-Number of returns; sources of income; statutory adjustments to income and itemized deductions by type; personal exemptions; tax liability and tax credits classified by taxable and nontaxable returns or by size of adjusted gross income or tax rate.

    • Corporations-Number of returns; receipts and deductions by type; net income; tax liability and tax credits; and assets and liabilities classified by industry groups, returns with net income, and size of total assets or business receipts.

  2. In addition to the regular annual corporation SOI report which features income statement, balance sheet, and tax data by industry and size classes, the SOI Division compiles ``Source Book'' of corporation statistics by asset size for more detailed industries than are used for the published report. Source books consisting mostly of historical data are also compiled for sole proprietorships and partnerships.

  3. Individual SOI reports, as well as studies on international income and taxes, are sold directly to the general public by the SOI Division as part of a statistical service which includes other related data as well. The SOI reports themselves may also be offered for sale by the Superintendent of Documents, U.S. Government Printing Office (GPO), at the option of GPO. The SOI corporation report is sold only through GPO. The source books are sold through the SOI Division.

  4. Most SOI studies are summarized for publication in the SOI Bulletin, which is a quarterly report, sold through GPO. The Bulletin includes

    • "Preliminary" data formerly published in separate reports.

    • Data formerly published in more detail in SOI supplemental reports.

    • Results of special studies and analyses, and

    • Historical data.

  5. Copies of SOI reports for official use are distributed

    • Throughout the IRS

    • Within the Treasury Department, and

    • To certain other Federal Government users, including the Congressional Joint Committee on Taxation (JCT), without charge.

  6. Public use files are produced as a by-product of many of the SOI programs. In most cases, the files consist of tabulated data on computer tape because of the need to preserve taxpayer confidentiality. However, the public use file of individual income tax returns, the so-called ``Tax Model'', contains separate tax return records, stripped of identifying information and edited to prevent disclosure.

1.13.1.5  (04-25-2005)
Coverage

  1. Comprehensive financial data from individual income tax returns are compiled annually in both "Preliminary" and final form. So-called Advance Data tabulations for the Treasury Department Office of Tax Analysis (OTA) and the JCT are based on an early cutoff of the sample receipts. (This same cutoff is then used for the ``preliminary'' data released to the public).

  2. In addition, the Taxpayer Usage Study of individual income tax returns provides data throughout the filing season based on returns as they are filed, and thus provides selected data ahead of the SOI "preliminary " tabulations.

  3. SOI data for non-farm sole proprietorships and for partnerships are compiled annually and funded mostly by the Department of Commerce. Data for farm proprietorships are compiled quinquennially, in Census of Agriculture and Economic Census years, for the Department of Agriculture. For all of these programs, the data include business receipts, net income, and other selected financial items, by industry groups.

  4. SOI data from estate tax returns and tax-exempt organization returns are also compiled annually.

  5. Estimates of personal wealth based on estate tax returns are regularly produced, classified by age, sex, marital status and type of wealth for that segment of the population for which an estate tax return would be required in the event of death.

  6. Data for other types of returns, such as those based on fiduciary and gift tax returns, are compiled on an occasional basis.

  7. Special studies are undertaken which link together data from certain returns, e.g., estate tax returns with returns of heirs.

  8. Results of all of these studies are provided to OTA and the JCT and most are summarized for release in the SOI Bulletin.

1.13.1.6  (04-25-2005)
Sampling

  1. With exceptions, SOI programs are based on samples of returns designated by computer from the Master File system. In order to obtain the data required for SOI, a plan for sampling is devised each year for the various types of returns included in the program.

  2. The types of returns to be selected and the details relating to the procedures to be followed are issued in Manual Supplements, processing handbooks, and specifications for computing weighting factors and sampling variability.

  3. Instructions for designating SOI returns by computer at the Martinsburg Computing Center are included in Computer Specifications Packages issued by the SOI Division. Instructions to service centers for selecting sample returns or for processing computer-designated samples, are included in IRM 1.13.3.

  4. Further instructions to all service centers, for securing, maintaining, and controlling sample returns, are included in Files Management and Services, and in IRM 1.13.3 which includes controlling and shipping instructions.

    • For SOI programs not involving all service centers, sampling specifications are issued to the specific centers by memorandum from the SOI Division.

    • Also, sampling guidelines for some manual samples are included as part of revenue processing instructions.

  5. Weekly sample selection summary reports are transmitted from the Martinsburg Computing Center to the SOI Division as a control on the completeness of the sample during statistical processing.

    • Expected sample totals are compared with actual sample totals to determine where sampling shortages exist and whether follow-up action is required.

    • In addition, these reports contain data on the number of returns filed for use in the development of the weighting factors used to produce preliminary or ``final'' SOI estimates.

  6. Information which has been transcribed from the major types of returns for tax administration purposes is then combined with additional data needed for SOI. The data are then tested by SOI computer programs for completeness and accuracy and any subsequent corrections applied.

  7. In order to complete its file of returns for a given year, the SOI Division needs to account for all current-year returns designated for the sample.

    • Late in the SOI processing year, lists of names of those taxpayers whose current-year returns have not been received for SOI are prepared and transmitted to the service centers.

    • Other field offices are contacted as appropriate relative to the returns of these taxpayers. A computer-generated report of missing returns or an equivalent listing is used for this purpose.

1.13.1.7  (04-25-2005)
Making Returns Available to Other Functions

  1. Other functional elements of the Service, such as Examination, Collection, and Criminal Investigation, may urgently need a return in the SOI samples before statistical processing on the return has been completed.

1.13.1.7.1  (04-25-2005)
Requesting Function

  1. The office needing the return should make an expedite request for it in writing to the service center where the return was sampled, using

    • Form 4251, Return Chargeout,

    • Form 2275, Records Request Charge and Recharge,

    • Form 4298, Audit Requisition and Information Report, or

    • Some other document.

1.13.1.7.2  (04-25-2005)
Service Center Action

  1. The service center where the return was filed will take one of the following actions

    • If the return is in the service center being processed for statistics, the service center will act on the request.

    • If the return has been forwarded to another processing center or the SOI Division for statistical processing, the request will be forwarded to the appropriate organization for action.

1.13.1.7.2.1  (04-25-2005)
Photocopying

  1. Returns requested by other functions may be photocopied and the photocopy may be statistically processed in lieu of the original.

  2. In this case, the original is sent immediately to the requester. Also, all pages of the return, plus any supporting schedules that may be attached to it, are photocopied.

  3. As stated in IRM 1.13.3, such photocopying is not charged to SOI.

  4. After statistical processing has been completed, the photocopy is destroyed.

1.13.1.7.2.2  (04-25-2005)
Expedite Processing

  1. The statistical processing of the return may be expedited, i.e., completed within three working days, and the original return forwarded The statistical processing of the return may be expedited, i.e., completed within three working days, and the original return forwarded

  2. In those cases where the processing requires so much time as to preclude the possibility of finishing the work within a short time frame as, for example, would be the case with returns that are also part of the SOI quality assurance program, then the photocopying procedure described above is used.

  3. Since expedite requisitions are handled singly rather than in the normal flow of work, the processing costs are greatly increased for such returns. Therefore, requests for expedite service should be kept to a minimum and should be limited to those returns that are urgently needed

    1. In the case of Examination needs, for instance, IRM 1.13.3 states that a return is urgently needed for immediate examination when the requested Examination action cannot be initiated or completed using a taxpayer's retained copy. The fact that a taxpayer's copy is not made available does not, standing alone, justify requesting a return from the SOI Division.

    2. All factors, such as the availability or non-availability of the retained copy along with the specific Examination need (e.g., prompt examination request, fraud, or undue delay) must be considered when determining the need to submit such a request for an SOI return.

1.13.1.8  (04-25-2005)
Statistical Processing Instructions

  1. The following subsections provide information concerning the various Statistical Processing Handbooks issued The following subsections provide information concerning the various Statistical Processing Handbooks issued by the Statistics of Income Division.

1.13.1.8.1  (04-25-2005)
General

  1. Sections in IRM 1.13 are prepared by the SOI Division for use by service centers and the National Office. They provide instructions common to all of the SOI programs. The areas covered by these IRM sections include

    • Section 1 (this section) covering general information on the Statistics of Income program.

    • Section 2 which includes program requirement information, and

    • Section 3 covering procedures and instructions for the controlling, shipping, and verification of the returns and related documents.

1.13.1.8.2  (04-25-2005)
Individual Income Tax Return

  1. Sections 4-6 of IRM 1.13 are prepared by the SOI Division for use by service centers, Computing Centers, and the National Office. They provide instructions for statistical processing from individual income tax returns and related forms and schedules as shown below

    • Section 4 - Industry Coding

    • Section 5 - Form 1040 Statistical Editing

    • Section 6 - Taxpayer Usage Study processing.

    .

  2. Also included are instructions for performing other functions, including quality review, necessary for the complete statistical processing of the returns.

1.13.1.8.3  (04-25-2005)
Corporation Income Tax Returns

  1. Sections 7-9 of IRM 1.13 are prepared by the SOI Division for use by service centers, Computing Centers, and the National Office. They provide instructions for statistical processing from corporation income tax returns and related forms and schedules as shown below.

    • Section 7 - Industry Coding

    • Section 8 - Form 1120 Statistical Editing

    • Section 9 - Insurance Company Editing

  2. Also included are instructions for performing other functions, including quality review, necessary for the complete statistical processing of the returns.

1.13.1.9  (04-25-2005)
Statistical Services

  1. The SOI Division provides assistance to other IRS offices including the following

    Taxpayer Usage Study This annual statistical study of individual income tax returns is designed primarily to provide early indicators of taxpayer reporting for use by IRS tax administrators and tax forms designers.
    Special tabulations from SOI data bases Depending on the resources required and the time frame involved, reimbursement by the originating IRS office may be necessary.
    Taxpayer Usage Study This annual statistical study of individual income tax returns is designed primarily to provide early indicators of taxpayer reporting for use by IRS tax administrators and tax forms designers
    Quality measurement The SOI samples are also used, in some cases, as the IRS quality measurement samples from which evaluations and analyses are made of the accuracy of tax return data transcribed for the Master File System.
    Use of SOI data in court cases The Division, when called upon, provides expert testimony in cases in which data it compiles are an issue.

1.13.1.9.1  (04-25-2005)
Written Specifications

  1. In order to ensure that the most effective use is made of the services available from the SOI Division for special studies or tabulations, IRS requests for such services (involving either new projects or changes in recurring projects) should be submitted in writing, with specifications as complete and definite as possible.

  2. If assistance is needed. Division project managers can provide help in working out the specifications with the requester. Consultations at a very early stage, before plans are well under way, facilitate the undertaking of a study.

  3. Specifications which are clear and mutually understandable by responsible persons representing both the requester and the SOI project manager are necessary and should cover both the source and availability of the basic data and the content, presentation, and timing of the results.

1.13.1.9.2  (04-25-2005)
Requests for Statistical Services

  1. Section 6108 of the Internal Revenue Code authorizes:

    1. statistics, in anonymous form, reasonably available with respect to the operation of the internal revenue laws (sections 6108(a) and (c)); and

    2. special statistical studies and compilations at the request of any party or parties, provided taxpayer return information is presented in unidentifiable form. A reasonable fee may be prescribed for the cost of the work or services performed for such party or parties (sections 6108(b) and (c)).

  2. The SOI Division reserves the right to publish tabulations from the special studies which it conducts under section 6108(b)..

  3. The SOI Division assists in negotiating and coordinating reimbursable agreements under section 6108(b) involving release of identifiable taxpayer information to Federal agencies authorized under section 6103(j) to receive such information for statistical use, subject to the conditions set forth in that Code section.

1.13.1.9.2.1  (04-25-2005)
In-Service Requests

  1. Requests from National Office Divisions should be addressed to the Director, SOI Division, and signed by the Division Director, National Director, or Assistant Commissioner.

  2. Requests from other IRS offices should be signed by the appropriate Regional Commissioner or Director.

1.13.1.9.2.2  (04-25-2005)
Out-Service Requests

  1. All requests for special statistical studies that do not require release of identifiable taxpayer information must be in writing to the Director, SOI Division, SOI Division, unless otherwise specified below.

  2. Requests for taxpayer data in unidentifiable form by Federal agencies that are also authorized access to specific identifiable taxpayer information for statistical purposes under Code section 6103 must be in writing to the Commissioner and be coordinated by the SOI Division with the Office of Disclosure.

  3. Requests for identifiable taxpayer data (or for special statistical studies requiring taxpayer data in identifiable form) by either the Department of Commerce (i.e., Bureau of Economic Analysis or Bureau of the Census) which is authorized access to certain identifiable taxpayer data for specified statistical purposes (section 6103(j)) or the Social Security Administration which is authorized similar access for purposes of administering the social security laws (section 6103(l)), must be in writing and must be coordinated by the SOI Division with the Office of Disclosure.

  4. In the case of the Census Bureau, by agreement, requests in writing are from Secretary to Secretary.

  5. In the case of the Bureau of Economic Analysis or the Social Security Administration, the written requests may be to the Commissioner of Internal Revenue (as the Secretary's delegate) from the Secretary of Commerce, on the one hand, or from the Commissioner, Social Security Administration, on the other.

  6. Requests by OTA for taxpayer data in identifiable form for tax administration purposes (defined in section 6103(b)) do not have to be in writing (section 6103(h)). (Section 6103(j) sets forth conditions under which certain requests must be in writing if they require access to taxpayer data in identifiable form for statistical use.)

  7. Requests for identifiable taxpayer data (or for statistical studies requiring taxpayer data in identifiable form) by the JCT (section 6103(f)) must be in writing to the Commissioner from the Chairman of the Committee or from its Chief of Staff.

    • By agreement, written requests for data on taxpayers whose returns are included in the SOI samples are required in order to establish the names of JCT staff members who will have access to such data. Thereafter, written requests are required only to revise this list of names.

    • For identifiable data on taxpayers other than those whose returns are included in the SOI samples, written requests are required on each occasion.

    • The SOI Division must coordinate written requests or agreements with the Office of Disclosure, Disclosure Litigation Division, or Legislative Affairs Division, as necessary.

  8. Requests by other committees of Congress (section 6103(f)) for identifiable data (or for statistical studies requiring taxpayer data in identifiable form) must be in writing to the Commissioner and can be signed only by the Committee Chairman. SOI Division must coordinate such requests with the Office of Disclosure, Disclosure Litigation Division, or Legislative Affairs Division, as necessary.

  9. Requests for data in either identifiable or unidentifiable form by State tax administrators must be coordinated by the SOI Division with the Office of Disclosure.

  10. Besides the coordination for purposes of avoiding possible unauthorized disclosure of identifiable taxpayer information, the SOI Division must make the appropriate arrangements for coordinating the statistical requests it receives that require use of data processing facilities or other resources in the district offices, service centers, Martinsburg Computer Center, or Detroit Computing Center.

1.13.1.10  (04-25-2005)
Requests for Previously Disseminated Statistical Data

  1. Requests for statistical data will not be considered to be requests for special statistical studies or compilations if

    • They are contained in reports or releases already disseminated outside the Service, or

    • The request can be readily compiled from available source data with so small an expenditure of time as to be considered normal to the preparation of replies to the request.

1.13.1.11  (04-25-2005)
Delegations of Authority for Reimbursable Services

  1. Delegation Order No. 100, as revised, authorizes the Assistant Commissioner (Taxpayer Service and Returns Processing) upon written request and payment of the cost of work, to perform the special statistical studies referred to in section 6108(b) of the Code.

    1. The Director, SOI Division, is authorized to commit resources for statistical work (of the type described in Commissioner's Delegation Order No. 100) by the SOI Division from Activity 62 funds and to approve reimbursable agreements upon the written request of any person or organization desiring releasable information available from the SOI program or from data bases maintained by the SOI Division for statistical purposes and willing to pay for the cost of work to be performed.

    2. Such approval will be subject to the availability of resources. The work performed must not in any way interfere with higher-priority assignments of the Division.

    3. This authority may not be redelegated.

  2. Reimbursable agreements initiated by the SOI Division to obtain services from other agencies or vendors must be approved by the Chief Operations Officer under Delegation Order No. 100. This authority is not redelegated.

1.13.1.12  (04-25-2005)
SOI Requests for Out-Service Statistical Services

  1. Under Code section 6103(n), the SOI Division may contract out the special statistical services mentioned in that section in connection with statistical studies relating to the operation of the internal revenue law (section 6108(a)) that are considered necessary for tax administration (section 6103(b)). Identifiable taxpayer information may be disclosed to a contractor for such studies, subject to prescribed rules and regulations.

  2. The SOI Division may not contract out the statistical services mentioned in section 6103(n) if they are in connection with special studies and compilations allowed under section 6108(b), even if the results are in unidentifiable form. This is because studies under this section are not considered to be for tax administration.

1.13.1.13  (04-25-2005)
SOI Records Management

  1. Since the SOI Division is responsible for the majority of historical records and historical information generated by the Service, it must maintain an accurate and current records retention schedule.

  2. This schedule must provide for identifying permanent records to be preserved and for identifying and scheduling temporary records to be destroyed. Identification and scheduling must be coordinated with the appropriate Headquarters Operations staff and, as appropriate, with the appraisal staff of the National Archives and Records Administration.

  3. Records for this purpose include statistical reports and releases and tabulations or tax return records used for statistical purposes in whatever mode: hard copy, microfilm, microfiche, or computer tape or disk.

  4. Records also include corresponding instructional materials or documentation, such as procedures used for statistical sampling, coding, editing, and validating, and information to facilitate use of computer tape/disk files.

  5. In addition, records include program and subject files, e.g., correspondence and reports and related papers concerning the administration of the SOI Division and its programs.

  6. Records retention schedules applicable to the SOI Division and its programs are contained in the Records Control Schedule.


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