NCPA - National Center for Policy Analysis

Toothless At The IRS

April 9, 2001

The Internal Revenue Service has become much less likely to question those with unreported income, to take taxpayers to court or to seize their property, according to new data from the Justice Department and the agency.

IRS officials contend they need more money and personnel if they are to do their jobs properly.

  • The IRS took civil court action in only 641 cases against recalcitrant taxpayers last year -- down from 2,519 in 1992.
  • Audit rates are down -- and are down sharply for taxpayers with incomes of more than $100,000, not adjusting for inflation, from one in nine in 1989 to one in 204 last year.
  • The IRS took action in 1998 in only one in every six cases where its computers showed income from employers and others was not reported on tax returns -- down from pursuit of almost two-thirds of such cases in 1991.
  • Correction notices -- which ask taxpayers to explain discrepancies in their reports or to pay additional taxes -- were mailed to 1.4 million taxpayers last year, down from 4.8 million in 1991.

Actions to seize property have all but halted and criminal prosecutions have fallen by half since 1992.

The figures come from a study by the Transactional Records Access Clearinghouse at Syracuse University.

Source: David Cay Johnston, "Income-Tax Enforcement Is Broadly Declining, New U.S. Data Indicate," New York Times, April 9, 2001.

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