Examination coverage and recommended additional tax after examination, by type and size of return
The IRS is committed to providing data that are both transparent and informative to taxpayers. Reports of audit statistics should serve to demonstrate how the IRS uses resources to promote voluntary compliance and enforce the law. It is the goal of the IRS Data Book to present these statistics in a clear, straightforward way that accurately reflects audit coverage.
The IRS regularly sees increases in the number of returns filed while resources available for examinations historically decreased. For example, in Fiscal Year (FY) 2010, the IRS received 230.4 million returns and employed 13,879 revenue agents, compared to 253.0 million returns and 8,526 revenue agents in FY 2019. The Service is constantly adapting and improving its processes to identify errors, detect fraudulent activity, and ensure resources are allocated as efficiently and effectively as possible.
Table 17, Examination Coverage and Recommended Additional Tax After Examination, by Type and Size of Return, provides audit statistics by tax year. Prior to the FY 2019 IRS Data Book, the examination tables (Tables 17b–20) presented data based on the assumption that most audits closed during the fiscal year were for returns filed in the previous calendar year. Audit coverage rates were therefore computed by dividing the number audit closures during the fiscal year (FY) by the number of returns filed during the previous calendar year. However, due in part to the changes in filings and the IRS workforce noted above, this relationship no longer holds.
Comparing returns filed and returns audited for the same tax year provides the most accurate measure of audit coverage, allowing for a direct and clear picture of IRS activities. Some audits close within a year while others take several. Table 17 includes data for both closed and in-process examinations, which provides a complete view of the application of IRS examination resources to a particular tax year’s returns.
Table 17 as published in the current Data Book shows examination information for each of the last 9 available tax years, while the full version of the table online will include all available years, dating back to Tax Year (TY) 2010. Each year, the oldest tax year data will no longer be updated to prevent inadvertent disclosure.
This table is presented as a “snapshot” in time, and the data will continue to change as open examinations are closed and new ones are opened. The number of audits for returns in recent tax years may appear low because, as of the end of the most recent fiscal year, relatively few examinations had been opened or closed. This reflects the normal timing of the audit process, which is based on when returns are identified for examination and the applicable statutes of limitation. As new audits of returns filed for recent tax years are opened, audit rates for those years will increase. In contrast, audit rates are less subject to change for returns filed for tax years that are past the normal statute of limitations for assessment, which is generally 3 years for a return that had been filed timely.
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