IR-2023-82, IRS Releases Fiscal Year 2022 Data Book Describing Agency’s Activities:

The Internal Revenue Service today issued its annual Data Book detailing the agency's activities during fiscal year 2022 (Oct. 1, 2021 – Sept. 30, 2022), including revenue collected and tax returns processed.

In many areas, the statistics in the 2022 Data Book reflect the impact that past resource constraints had on the agency's ability to provide adequate taxpayer service and address compliance issues, including audits of higher income taxpayers, partnerships, and large corporations. …

For the past decade, the IRS has seen an increase in the number of returns filed paired with a decrease in resources available for examinations particularly for the most complex tax returns of high-income and high-wealth individuals, large corporations, and complex partnerships. Going forward, as the IRS moves to implement the Strategic Operating Plan released earlier this month, the agency is focused on pursuing high-income and high-wealth individuals, complex partnerships and large corporations that are not paying the taxes they owe. As a result, the IRS has no plans to increase the audit rate for households making less than $400,000.

The 2018 information is the most recent year we have final audit rate data because it is the most recent tax year for which the statutory period has closed, meaning in most cases no new audits will be started and the audit coverage rates should be final.

Typically, audit rates for higher-income categories increase over time as new audits are opened during the statutory period. This means the audit numbers for higher-income taxpayers listed in the 2022 Data Book Table 17 will increase over time for tax years within the statutory period; the final exam rates for these taxpayers will be significantly higher in future years.

IRS Statement, Examination Coverage Rates in the 2022 Data Book:

The statistics in the 2022 Data Book demonstrate that continued resource constraints have limited the agency's ability to address high-end noncompliance. Tax Year 2018 audit rates for taxpayers with more than $10 million total positive income were 9.2%, down from 13.6% for Tax Year 2012. Over the same period, the overall corporate audit rate fell from 1.3% to .6% and the audit rate for partnerships fell from .3% to .1%.

The Inflation Reduction Act provided the IRS with resources to expand enforcement in areas where our current audits rates have been too low to address systematic noncompliance, encouraging some taxpayers to take greater risks given such low audit rates. IRS will focus the new IRA enforcement resources on identifying and addressing non-compliance among high-income and high-wealth individuals, large partnerships, and large corporations. Improved analytics will better support risk-based enforcement decisions and inform opportunities to expand use of existing resources to address high-risk noncompliance.

The IRS will focus the Inflation Reduction Act enforcement resources on hiring the accountants, attorneys, engineers, economists and data scientists needed to pursue high-income and high-wealth individuals, complex partnerships, and large corporations that are not paying the taxes they owe. Given the increase in filing populations over time, the complex nature of the tax filings and the IRS' inability to keep pace due to lack of resources, it makes sense to focus initial Inflation Reduction Act implementation efforts exclusively on increasing our capacity to assess compliance of high-income and high-wealth individuals, complex partnerships, and large corporations. The IRS has no plans to increase the audit rate for households making less than $400,000.

• SOI Tax Stats, IRS Data Book
• SOI Tax Stats, IRS Data Book Index of Tables
• Accounting Today, IRS Plans to Hire More Accountants
• Law360, Audit Rates Decline For Corps., Partnerships, IRS Data Shows