Important Changes for Fiscal Year 2019 IRS Data Book
We redesigned the Fiscal Year 2019 IRS Data Book to provide more information on IRS compliance activities and service levels. As a result, many tables have been reordered and renumbered. Compare the new and old table numbers.
Examination Coverage and Recommended Additional Tax After Examination, by Type and Size of Return, Tax Years 2010–2018
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.
For the past decade, the IRS has seen an increase in the number of returns filed as well as a decrease in resources available for examinations (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.
New this year, Table 17a, Examination Coverage and Recommended Additional Tax After Examination, by Type and Size of Return, Tax Years 2010–2018, provides audit statistics by tax year. Historically, the examination tables (Tables 17b–20) of the Data Book 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.
Table 17a shows examination information for each of the last 9 tax years (2010–2018). 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.
Another benefit of the newly designed Table 17a is the inclusion for the first time of statistics for in-process examinations. This offers an additional view of the examinations the IRS has in active audit status as of the end of the fiscal year. Together, closed and in-process examinations provide a complete view of the application of IRS examination resources to a particular tax year’s returns.
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 FY 2019, 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 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. Tax Year 2015 is the most recent year outside the normal statute period.
Table 17b (Table 9a in prior-year Data Books) is included in full this year and portrays examination data by fiscal year as has been done in the past. As we continue to move toward more accurate and transparent methods of reporting data, Table 17b may not be included in its current form in future years.
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