ROBERT E. MCKENZIE, ESQ.
ARNSTEIN & LEHR
120 SOUTH RIVERSIDE PLAZA, SUITE 1200 
CHICAGO, IL 60606
312-876-6927 
312-876-7318  fax 

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IRS EXAMINATION STATISTICS

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IRS AUDIT SYSTEM

IRS AUDIT PROCEDURES

Enforcement Revenue Collected¹

(Dollars in Billions)	FY 1998	FY 1999	FY 2000	FY 2001	FY 2002	FY 2003	FY 2004	FY 2005	FY 2006	FY 2007
Collection	$21.3	$21.3	$22.1	$24.3	$24.4	$24.8	$25.7	$26.6	$28.2	$31.8
Examination^2	$12.5	$10.0	$10.2	$7.9	$7.9	$10.7	$14.7	$17.7	$17.2	$23.5
Document Matching^3	$1.4	$1.6	$1.5	$1.6	$1.8	$2.2	$2.7	$3.1	$3.3	$3.9
Total	$35.2	$32.9	$33.8	$33.8	$34.1	$37.6	$43.1	$47.3	$48.7	$59.2
Staffing for Key Enforcement Occupations^4
	FY 1998	FY 1999	FY 2000	FY 2001	FY 2002	FY 2003	FY 2004	FY 2005	FY 2006	FY 2007
Revenue Officers	6,796	6,516	5,538	5,376	5,502	5,076	5,156	5,249	5,627	5,662
Revenue Agents	13,708	13,085	12,542	12,092	11,743	11,780	11,811	12,192	12,778	12,816
Special Agents	3,045	2,942	2,752	2,735	2,868	2,834	2,778	2,771	2,780	2,709
Total	23,550	22,543	20,832	20,203	20,113	19,691	19,746	20,211	21,185	21,187

1 Enforcement revenue collected in a fiscal year includes tax, interest, and penalties from multiple tax years. Some enforcement activities can take more than a year to close and may generate revenue over several years, so it is generally inappropriate to compare revenue collected in a given fiscal year to the staffing available for that same year.

2 Includes any revenue collection attributable to IRS Appeals activities.

3 Includes the Information Reporter Program (IRP) and the Automated Underreporter (AUR) Program.

4 Enforcement staffing levels presented in Full Time Equivalents (FTE).

Income $1 Million and Higher

	FY 2004	FY 2005	FY 2006	FY 2007
Field	5,857	7,166	9,312	12,259
Correspondence	3,719	5,669	7,703	19,123
Total Examinations	9,576	12,835	17,015	31,382
Returns Filed in Prior CY*	190,372	210,280	270,161	339,138
Coverage	5.03%	6.10%	6.30%	9.25%

Income $200,000 and Higher
	FY 2004	FY 2005	FY 2006	FY 2007
Field	n/a	n/a	36,059	43,640
Correspondence	n/a	n/a	51,499	69,465
Total Examinations			87,558	113,105
Returns Filed in Prior CY*			3,400,435	3,942,702
Coverage			2.57%	2.87%

* CY = Calendar Year

Income $100,000 and Higher

Field	FY 2002 64,955	FY 2003 67,439	FY 2004 70,452	FY 2005 84,326	FY 2006 112,484	FY 2007 127,544
Correspondence	47,308	71,940	95,769	134,882	145,367	165,644
Total Examinations	112,263	139,379	166,221	219,208	257,851	293,188
Returns Filed in Prior
CY*	13,020,183	13,193,122	13,277,077	13,970,598	15,447,964	16,599,800
Coverage	0.86%	1.06%	1.25%	1.57%	1.67%	1.77%

Total Individual Returns

Field	FY 2002 205,134	FY 2003 206,457	FY 2004 197,388	FY 2005 247,235	FY 2006 302,959	FY 2007 311,339
Correspondence	538,747	642,839	810,486	968,073	990,722	1,073,224
Total Examinations	743,881 129,444,947	849,296 130,341,159	1,007,874 130,134,277	1,215,308 130,576,852	1,293,681 132,275,830	1,384,563 134,421,400
Returns Filed in Prior CY*
Coverage	0.57%	0.65%	0.77%	0.93%	0.98%	1.03%

*CY = Calendar Year

Subchapter S Returns (Form 1120-S)

Returns Examined	FY 2002 11,646	FY 2003 9,695	FY 2004 6,402	FY 2005 10,417	FY 2006 13,984	FY 2007 17,657
Returns Filed in Prior CY*	3,022,589	3,191,108	3,369,122	3,523,934	3,715,249	3,909,730
Coverage	0.39%	0.30%	0.19%	0.30%	0.38%	0.45%

*CY = Calendar Year

Partnership Returns (Form 1065)
	FY 2002	FY 2003	FY 2004	FY 2005	FY 2006	FY 2007
Returns Examined	5,543	7,871	6,226	8,489	9,777	12,195
Returns Filed in Prior CY*	2,165,011	2,271,755	2,405,361	2,546,439	2,720,290	2,934,597
Coverage	0.26%	0.35%	0.26%	0.33%	0.36%	0.42%

*CY = Calendar Year

Examination - Large Corporation Return Closures and Coverage Rates

Assets $10 Million and Higher	FY 2002	FY 2003	FY 2004	FY 2005	FY 2006	FY 2007
Total Returns Examined	8,443	7,125	9,523	10,829	10,591	9,644
Returns Filed in Prior CY*	59,602	58,974	56,883	54,091	56,847	57,357
Coverage	14.2%	12.1%	16.7%	20.0%	18.6%	16.8%
By Asset Class	FY 2002	FY 2003	FY 2004	FY 2005	FY 2006	FY 2007
$10 Million < $50 Million
Returns Examined	2,540	1,987	2,864	3,535	4,218	4,473
Coverage	7.8%	6.2%	9.4%	12.3%	14.2%	15.0%
$50 Million < $100 Million
Returns Examined	865	782	965	1,148	999	801
Coverage	10.7%	9.8%	12.9%	16.4%	13.8%	11.4%
$100 Million < $250 Million
Returns Examined	1,289	1,026	1,308	1,287	1,085	946
Coverage	16.0%	12.9%	16.9%	17.5%	14.0%	12.1%
$250 Million and Higher
Returns Examined	3,749	3,330	4,386	4,859	4,289	3,424
Coverage	34.4%	29.8%	39.8%	44.1%	35.3%	27.2%

Collection Enforcement Actions

Levies	FY 2001 674,080	FY 2002 1,283,742	FY 2003 1,680,844	FY 2004 2,029,613	FY 2005 2,743,577	FY 2006 3,742,276	FY 2007 3,757,190
Liens	426,166	482,509	544,316	534,392	522,887	629,813	683,659
Seizures	234	296	399	440	512	590	676

Criminal Investigations

	FY 2002	FY 2003	FY 2004	FY 2005	FY 2006	FY 2007
Investigations Initiated	3,906	4,001	3,917	4,269	3,907	4,211
Information & Indictments	1,924	2,128	2,489	2,406	2,319	2,323

Prosecutions Recommended

Tax and Tax Related	FY 2002	FY 2003	FY 2004	FY 2005	FY 2006	FY 2007
	991	1,336	1,439	1,434	1,343	1423
Nontax (illegal)	483	521	719	658	756	866
Narcotics	659	684	879	767	621	548
Total	2,133	2,541	3,037	2,859	2,720	2837
Incarceration Rate	91.5%	91.5%	92.2%	91.2%	91.5%	90.20%
Avg M	19	19	21	22	22	22

Nonfiler Criminal Enforcement.

	FY 2007	FY 2006	FY 2005
Investigations Initiated	516	562	549
Prosecution Recommendations	300	322	413
Indictments/Informations	266	307	316
Sentenced	278	270	280
Incarceration Rate*	80.6%	80.0%	78.2%
Avg. Months to Serve	38	40	34

Fiscal Year 2008 Criminal Cases

(October 1, 2007 - December 31, 2007)	Totals
Investigations Initiated	882
Prosecution Recommendations	670
Information/Indictments	602
Total Convictions	504
Total Sentenced*	498
Percent to Prison	85.9%
Average Months to Serve	40

Taxpayer Service	FY 2003	FY 2004	FY 2005	FY 2006	FY 2007
Electronic Filing (e-File) Rate -- Individual Returns	40%	47%	51%	54%	57%
Toll-Free Assistor Level of Service	80%	87%	83%	82%	82%
Toll-Free Tax Law Accuracy	82%	80%	89%	91%	91%
Toll-Free Customer Satisfaction Rating	93%	94%	94%	94%	94%
Web Page Visits on IRS.Gov (in millions)	102.6	152.7	176.5	197.1	217.8
Online Refund Status Checks through 'Where's My Refund (in millions)	12.4	14.9	22.1	24.7	32.1

Changes last made on: 4/18/2008