IRS audits at record lowgreenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread
02/16/2001 - Updated 04:29 PM ET IRS audits at record low
By Jonathan Weisman, USA TODAY
WASHINGTON — Your chances of being audited by the Internal Revenue Service have plunged to one in every 204 tax returns filed, the IRS reported Thursday. That's the lowest audit rate that experts can ever recall, and half the rate of just two years ago.
Even upper income taxpayers, who have traditionally been the focus of IRS attention, have seen their audit rates fall. Last year, the IRS audited fewer than 1 in 100 tax returns from families with incomes of $100,000 or more, a 31% decrease over the 1999 rate.
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The slide in audits has raised concern that honesty could suffer as fears of policing decline. If taxpayers begin to believe that others are cheating, the temptations to shave their own tax burdens may become irresistible, IRS Commissioner Charles Rossotti says. He estimates that the declining audits cost the government more than $2 billion in the past year.
"Most people are paying their taxes," he says. "It's only fair to them that they should expect the IRS to go out and do something about (cheaters)."
Sheldon Cohen, a former IRS commissioner, was more blunt: "Like cars speeding along a highway, if you don't ever see policemen, you tend to go 10 or 15 miles per hour over the speed limit."
"We are on the slippery slope" toward massive cheating, Cohen says.
Rossotti says the reasons for the decline in audits include:
A decade-long staff slide.
And IRS legislation — passed in 1998 amid a furor over alleged IRS abuses — that gave taxpayers new rights and IRS agents new customer-service responsibilities that have taken them from enforcement.
Even as its work load increased under the new law, the IRS' employment fell by 18,800 from the height of more than 116,000 in 1992.
Many of those who remain have been reassigned from enforcement to training and customer service, the IRS says.
About 560 agents were detailed to deal with claims under a single provision in the 1998 law that allows spouses of tax cheats to avoid penalty.
By November, the backlog of such "innocent spouse" claims stood at 38,300, IRS spokesman Don Roberts says.
The consequences of declining tax enforcement seem clear. Government levies on personal assets plunged from 2.5 million the year the law passed to 219,778 last year. Property seizures have fallen from 2,307 in 1998 to 174 last year.
Congress did give the agency funding for more than 2,000 new employees this year, says Senate Finance Committee Chairman Chuck Grassley, R-Iowa. However, Rossotti is appealing for more .
Rep. Benjamin Cardin, D-Md., an architect of the 1998 law, says the commissioner should not hold his breath.
"You have a dilemma," he says. "Do you want to provide money for IRS agents or do you want to provide more money for schools? People are going to choose schools."
-- Martin Thompson (firstname.lastname@example.org), February 16, 2001
Antiquated computers? Somebody is a liar and IRS needs to return the money spent in the past five years on upgrades.
-- Tom Beckner (email@example.com), February 17, 2001.
Wow, this reads like a PR puff piece!
And all of those Billions of dollars on upgrades, maybe the system didn't do so well so the upgrades are useless.
-- (firstname.lastname@example.org), February 17, 2001.
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-- spider (email@example.com), February 17, 2001.
From my files concerning the IRS.
IRS Year 2000 Project Goals and Overview [ Click for Text Only Version ] Just like many federal government agencies and private corporations, the Internal Revenue Service depends on automated systems to process tax returns, issue refunds, deposit payments, and provide taxpayers with basic answers to their more than 170 million inquiries a year. As a result, Commissioner Rossotti has made fixing the Year 2000 problem a top priority at the IRS!
That's why the IRS created the Century Date Change (CDC) Project Office in 1996 to manage its Y2K effort.
The IRS' Year 2000 project goals include: Ensuring that the nation's tax processing systems continue to function in the Year 2000 and beyond Continuing to provide effective customer service to taxpayers while addressing Y2K challenges.
Project Scope The IRS' Y2K problem is extremely challenging because of the large number of computer and software systems that are affected. The IRS has over 80 mainframe computers, 1,400 minicomputers, and over 100,000 personal computers. There are also over 40 million lines of code in 79,000 software programs that support IRS operations. And computer systems aren't the only things that must be made Y2K compliant - items such as security systems, heat and air conditioning, and office equipment in over 850 IRS locations also need to be checked for the Y2K bug. Project Progress We have fixed 95% of our mission-critical systems and are using these same Y2K compliant systems to process tax returns. We've made significant progress in our Y2K efforts so far, but there is still work to do. Our goal to is make the remaining systems Y2K compliant by Fall 1999 in order to conduct the final, integrated test of our systems. The IRS fully expects "business as usual" as we enter the new millennium. If, for any reason we experience Y2K glitches, we are prepared to deal with them to minimize their effects on you, the taxpayer. XXXXX
IN LETTER, COMMISSIONER WARNS OF Y2K RISKS AT IRS
"The quality of the IRS's inventory currently poses a high risk to the Y2K effort," IRS commissioner Charles Rossotti declared in a letter to House Ways and Means Committee chairman Bill Archer.
The letter was obtained by INVESTOR'S BUSINESS DAILY. October 15, 1999
IBD's John Berlau reports in an exclusive set for Friday editions that the agency has not conducted a complete Y2K inventory in many of its centers and offices.
And there are growing concerns over possible mistakes made at the IRS during its initial Y2K check.
Experts have "expressed concern that hardware and software missed on the IRS's inventory may cause failures that would hit taxpayers," writes Berlau.
Although the letter to Archer is dated Oct. 15, Rossotti "didn't mention the inventory problem in a major speech he gave this week to the American Institute of Certified Public Accountants. He said then, 'In the area which is clearly critical to our whole economy, the tax system will continue to function, notwithstanding Y2K.'"
In the letter Rossotti admitted the IRS hasn't done a wall-to-wall- inventory of all IRS computers.
He wrote that the IRS plans to complete the inventories of major offices prior to Dec. 31 and is making progress in its contingency plans.
An IRS spokesman had no comment on the letter.
-- Martin Thompson (firstname.lastname@example.org), February 17, 2001.