2014 Tax Season: Status Check

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Today the IRS released some key filing season statistics to show how they are doing compared to last year at this time.

So far the IRS has received some 49.6 million tax returns and has processed around 98 percent of them.  A vast majority of those returns were filed electronically — about 46.6 million.  If you hadn’t noticed, as much as the IRS loves sending taxpayers mounds of mail, they really do not like receiving it.  Hence the constant emphasis on e-filing.

So far the IRS has paid out over 40 million tax refunds; most of them being directly deposited.  As much as the IRS loves sending taxpayers mounds of mail, they really do not like sending paper checks.  Hence the constant emphasis on direct deposit.

One stat that always blows my mind is the average refund amount, which is now over $3,000.  I think that number tapers off as we approach the tax filing deadline since those who are eager to file early are typically the same people who expect a fat tax refund.  Personally I would rather pay what I owe in April than give the government an interest-free loan throughout the year.

And finally, the statistic that has left me wondering is the irs.gov website traffic.  This is one of the only stats that has dropped since last year.  The only other stat that is lower this year is the number of e-filed returns by tax professionals, but this is probably going to continue to drop as the number of e-filed returns prepared by taxpayers from their home computers (self-prepared returns) continues to rise.  Could the decreased website traffic mean that people are relying more heavily on tax software?  Could it mean that taxpayers are turning to the phones more than in years past?  There are a million possible explanations.

IRS Stat Interpretation

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I always find it interesting that when the IRS comes out with new statistics, they try to distort them ever so slightly to appear more in their favor.  Or the IRS will highlight one thing and downplay another.  Most of the time it’s hard to see what benefit they find in this.  Here is an example I found on the News & Events page of the IRS website that compares data from May 10, 2013 with data gathered at this time last year.

The article bears the title “More Taxpayers e-file from home in 2013,” which also happens to be the first distortion.  There are a number of statistics on this page, including the drop in number of refunds issued, the drop in refund dollar amounts, and the drop in total money refunded countrywide.  That’s a pretty important statistic, isn’t it?  And never mind the fact that the total number of tax returns received so far has dropped as well as the total number of tax returns that have been processed.  That kind of information could have made an equally relevant title, right?

And the most drastic percentage change (in this news release) from 2012 to 2013 was regarding irs.gov visits.  As of May last year, 255,269,615 people had accessed the IRS website looking for information about their individual tax questions.  This year that number climbed to 318,408,842.  That’s a 24.7 percent increase!  This was also a stat that the IRS liked because they flagged it and noted that “More people are using IRS.gov to get answers, file their returns and resolve issues.”  But are they really obtaining a positive result on the website?  This is the way I interpret the stat: the IRS can’t take many taxpayer calls because there is not enough money to hire the right number of personnel, so people have resorted to finding things on their own on irs.gov.

Interesting IRS Stats

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image via grabstats.com

Let’s look back on some of the statistics compiled by the IRS for Fiscal Year 2011 and try to determine what will be reported for FY 2012.  Will we see any new tax relief trends?  My source is the Statistics of Income tax stats found in the “IRS Data Book.”

  • Number of new deliquent tax accounts in FY 2011: 8,011,000 (17,000 more than 2010)
  • Number of untimely filed returns by end of FY 2011: 3,862,000 (162,000 more than 2010)
  • Number of Offers in Compromise filed: 59,000 (2,000 more than 2010)
  • Number of Offers in Compromise accepted: 20,000 (6,000 more than 2010)
  • Number of Federal Tax Liens filed: 1,042,230 (54,146 less than 2010)
  • Number of levy notices served on 3rd parties: 3,748,884 (142,066 more than 2010)
  • Number of seizures: 776 (171 more than 2010)

The only stat that appears to be on a downward trend is the filing of Federal Tax Liens.  This is good news for taxpayers.  For several years now advocacy groups have been questioning the efficacy of tax liens as a collections tool; maybe the IRS is finally listening.

More and more taxpayers continue to file and pay late, and incur tax debt.  And the IRS tries to keep pace by increasing active collection activities.

What about the Offer in Compromise acceptance rate?  You see a lot of percentages thrown around by tax attorneys and tax resolution firms.  But according to IRS’ figures, they accepted 25% in 2010 and 34% in 2011.  This is probably the most encouraging data of all. Let’s hope this trend continues and the IRS accepts event more offers in compromise when the statistics are available for FY 2012.

The IRS Book of Numbers

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Nowhere else will you ever see as many “millions,” “billions,” and “trillions” than in the Annual IRS Data Book.  The 2011 IRS Data Book was released this week and, once again, it is teeming with large, almost incomprehensible numbers; just the kind of thing that makes a tax attorney smile.

The Data Book is the number one source for statistics related to return filing, refunds, revenue collected, enforcement, taxpayer assistance, IRS budget, and IRS workforce.  Here is a small sampling of some of the huge numbers reported in the 2011 Data Book:

  • IRS collected $2.4 trillion in 2011
  • IRS processed over 234 million tax returns
  • Taxpayers filed more than 133 million returns electronically (77% of all individual returns)
  • IRS paid almost $338 billion in refunds
  • IRS examined 1.1 percent of all individual income tax returns
  • IRS examined 1.5 percent of all corporate income tax returns
  • 319 million visits to irs.gov for taxpayer assistance
  • 83 million walk-ins and phone calls for taxpayer assistance

If you’ve never seen the annual data book, it may be worth your time to take a look.  It is interesting to see the progression of total revenue collected year-by-year beginning in 1960, or compare revenue collected by state or by type of tax.  Just don’t inadvertently hit your print button because everything about the publication is huge, including the page count — 74

IRS Has Increased Criminal Investigations and Convictions

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According to an August 29, 2011 press release by the Treasury Inspector General for Tax Administration (TIGTA), IRS criminal investigations are up 12.3% and criminal convictions have risen 6.9% since 2009.  These figures include investigations of illegal businesses and income sources, but the Criminal Investigation division of the IRS still spends a majority of its time with “legal source” investigations.

Often a bearer of bad news, the last time I mentioned TIGTA, they had reported a 74% increase in tax lien filings at the IRS.  Of course the government doesn’t see it this way, in fact TIGTA commended the IRS for surpassing its goals and expectations.