IRS: 89K Fewer Audits in 2013 Because of ‘Sequestration and Furloughs’

Terence P. Jeffrey | March 7, 2014 | 4:15pm EST
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( Because of “sequestration and furloughs” the number of individuals audited by the Internal Revenue Service fell by 80,000 in fiscal 2013 and the number of businesses audited fell by 9,000, according to the IRS’s Budget in Brief released this week.

“As a result of the impacts of sequestration and furloughs, the IRS delivered key enforcement programs below 2012 levels,” said the budget document. “Total individual audits fell 5 percent from 1.48 million to 1.40 million, while audits of high income individuals declined from 179,000 to 172,000. Business return audits dropped 13 percent from 70,000 to 61,000”

Because of the decline, says the IRS, the federal government pulled in only $9.83 billion in revenue from audits in fiscal 2013, the lowest in ten years.

However, the IRS’s overall revenue from enforcement actions increased by $3.1 billion, climbing from $50.2 billion in fiscal 2012 to $53.3 billion in fiscal 2013.

“In FY 2013, collections related to all enforcement activities totaled $53.3 billion, the fourth consecutive year the IRS exceeded $50 billion for a total IRS-wide ROI of $4.8 to $1,” said the budget document.

“Total Enforcement Revenue collected increased $3.1 billion over FY 2012,” said the document. “Most of the increase came from $2.6 billion rise in revenue from Appeals which, due to the timing of the Appeals process, generally relates to examinations for much earlier years. Revenue from the Collection function, the levels of which also frequently rise and fall in tandem with the overall health of the economy, increased by nearly $1 billion in FY 2013.

“While the overall receipts from enforcement increased in 2013 compared to the prior year, the total is still down by more than $4.3 billion from four years ago,” said the budget document. “The reason for this decline is primarily due to a decline in revenue from audits, which dropped nearly $400 million in FY 2013 to $9.83 billion, the lowest level in a decade. This decline in audit revenue is attributable to a decline in the number of returns audited.”

The “sequestration” provisions in the Budget Control Act of 2011 called for cutting $54 billion in discretionary federal spending in fiscal 2013, according to the CBO.

During fiscal 2013, the IRS staff took “three furlough days on May 24, June 14 and July 5, due to the budget situation including the sequester,” the IRS explained in a press release last August. On furlough days, the IRS had previously explained: “No tax returns will be processed and no compliance-related activities will take place.”

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