According to a recent Forbes article, the tax returns of more Dallas residents may have been reviewed this year than in years past. The Internal Revenue Service conducted significantly more taxpayer audits last year than it did in previous years, according to the yearly IRS inspection conducted by the U.S. Treasury Department. The review noted that the IRS has also increased use of tax collection tools like liens, levies and wage garnishments to add billions more to the government fund.
The use of IRS tax liens against taxpayers’ properties has soared by 74 percent since 2006. IRS levies and asset seizures against delinquent taxpayers each increased by 4 percent from 2006 to 2010.
More tax returns are being scrutinized than in 2006. Five years ago, an average of one in every 103 taxpayers was audited. Last year, the odds of an audit increased to one in 90.
Some of the reasons for the elevated audit numbers are new tax legislation and constantly updated laws. The tax system has expanded and become more complex, making filing mistakes more likely.
In just one 2009 law, the American Recovery and Reinvestment Act, more than new 55 provisions were added to the tax code.
The IRS Oversight Board, which gauges taxpayers’ feelings about voluntary compliance among other things, believes that the threat of an audit is a powerful incentive for taxpayers to file honest tax returns. A recent study showed that 64 percent of taxpayers filed their taxes truthfully in fear of being singled out by the IRS.
Audits by mail shot up more than 8 percent in 2010 to one in every 110 tax returns. Only about one in every 500 taxpayers ever met in person with a tax representative last year.
Increased IRS enforcement had a positive financial effect for the government last year. Revenue stemming from tax enforcement experienced an 18 percent hike to $57.6 billion in 2010. The recent Forbes article suggests that the increase in revenue could mean the IRS will continue to add to the staff of people who review tax returns.
Source: Forbes, “More IRS Cops, More Audits, Says Treasury Report,” Ashlea Ebeling, Aug. 17, 2011