Almost every type of enforcement effort by the IRS has declined since
the early 1990s, according to a report issued recently by the
Transactional Records Access Clearinghouse (TRAC) at SU. At the same
time, the number of individual and corporate tax returns filed with the
government has increased.
The data were part of TRAC's yearly report on the IRS. TRAC was
established in 1989 to provide the American people, oversight
institutions, news organizations and others with comprehensive
information about the activities of the federal government and the
communities in which these activities take place.
TRAC obtains much of its data through use of the Freedom of
Information Act. Its data and findings are made available through its
public Web site (http://trac.syr.edu) and two e-commerce sites where
subscribers can query TRAC's databases directly.
While declining to draw conclusions from the new data, TRAC
co-director Susan Long commented that the report "certainly raises
questions about whether this level of enforcement is adequate to support
the government's tax collection efforts." Long is also an
associate professor of quantitative statistics in the School of
Management.
Examples of the IRS's faltering enforcement efforts include:
?A computer program identifies individual returns with potential
underreporting discrepancies. In the early 1990s, the IRS followed up on
one-third to one-half of these. In 1998, it followed up on only one in
six.
?In 1991, 4.8 million taxpayers received correction notices asking
them to pay more taxes. In 2000, only 1.4 million of these notices went
out.
?In 1992, the IRS did face-to-face audits of 55 percent of the
nation's largest corporations. In 2000, only 31 percent were audited.
?In 1987, the IRS brought civil suits against 2,519 noncompliant
taxpayers. In 2000, the number of such suits was just 641.
The report points out that it is impossible to know the impact of
these enforcement changes on taxpayers' level of compliance because
the IRS does not measure compliance levels. "In the absence of
reliable information on the subject, however, experts are concerned that
on a long-term basis less enforcement may well result in less compliance
with the tax laws," the report states.
IRS staffing has been cut by almost one-third since 1988, according
to the report. At the same time, the number of individual and corporate
returns has increased by 20 percent, and the agency has been instructed
to offer additional services that require more people.
The TRAC report says that while technology has allowed the agency to
accomplish some tasks with fewer staff, computers have not completely
made up for staffing decreases.
