Paul L. Caron

Tuesday, May 31, 2022

IRS Releases 2021 Data Book: Audit Rates Plummet For The Rich

Following up on my previous post, GAO: IRS Audit Rates Plummet For The Rich:  IR-2022-111, IRS Releases Fiscal Year 2021 Data Book Describing Agency’s Activities (May 26, 2022):

2021 IRS Data BookThe Internal Revenue Service today issued the Data Book detailing the agency's activities during fiscal year 2021 (October 1, 2020 – September 30, 2021). ...

In addition to describing work performed during the pandemic, the IRS Data Book for fiscal year 2021 comprises 33 tables describing a wide variety of IRS activities from returns processed, revenue collected, and refunds issued to the number of examinations conducted and the amount of additional tax recommended, as well as budget and personnel information. The Data Book provides point-in-time estimates of IRS activities as of September 2021. A lengthier discussion of recent data was also released today.

IRS Table 2

As the pandemic continued into 2021, the IRS delivered tax administration relief to millions of taxpayers, providing financial assistance for Americans.

The American Rescue Plan Act of 2021 authorized additional rounds of stimulus payments (EIP 3), which was signed into law on March 11, 2021. The IRS started issuing checks the very next day — March 12, 2021 — providing immediate help to people across the country. The 2020 Recovery Rebate Credits allowed individuals who did not receive their first- or second-round EIPs, or who received less than the amounts they were eligible for, to claim the credits when they filed their 2020 tax return.

Advance Child Tax Credit and online support
The American Rescue Plan contained the important change allowing up to half of the tax year 2021 Child Tax Credits to be disbursed as advance payments to eligible families from July through December. As a result, during the second half of 2021, more than 37 million families—covering more than 61 million qualifying children—received more than $93 billion in advance CTC payments.

In addition to COVID-19-related tax relief, the IRS implemented vital online tools to support the 2021 advance CTC payments and reduce child poverty. These online tools included:

  • The Child Tax Credit Non-filer Sign-up Tool, which helped eligible families who were not required to file tax returns register for the monthly payments.
  • The Advance Child Tax Credit Eligibility Assistant, which helped families verify whether they qualified for advance CTC payments.
  • The Child Tax Credit Update Portal, to enable families to verify their eligibility, update their bank account information and mailing address and provide other information to the IRS.

Tax administration during COVID-19
At the same time as providing various pandemic-related tax relief measures to Americans, the agency continued its everyday operations, processing more than 261 million tax returns, and collecting more than $4.1 trillion in federal taxes during the fiscal year — about 96% of federal revenue from all sources.

Collection revenue
Overall, net revenue through enforcement by the collection function equaled almost $60 billion, an increase of 54% over the prior year. As part of its collection activities, the IRS saw an increase in the use of Payment Plans. Almost 2.4 million taxpayers established new payment plans (Installment Agreements) with the IRS during FY 2021, an increase of 29% compared to FY 2020. Furthermore, IRS collected nearly $13.7 billion through installment agreements in 2021, up 9% from the prior fiscal year.

Other IRS activities
Under the IRS's Comprehensive Taxpayer Attitude Survey, the most recent findings were that most taxpayers still agree that cheating on their income taxes is not at all acceptable.

You'll find many fascinating statistics within the Data Book," said Rettig. "But there's more to the IRS than numbers and graphs. IRS employees are dedicated to the mission, and our agency is made up of people who give back to their communities and help one another. Our employees provide significant support for those devastated by hurricanes, wildfires and other natural disasters. Across the nation, they did amazing work in their communities to help those impacted by COVID-19."

Law360, IRS High-Income Audits Down Over 7-Year Period, Agency Says

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