10 Notable Statistics from the IRS’ 2021 Data Book

The Internal Revenue Service (IRS) recently published its Data Book for 2021. The 2021 Data Book contains a lot of information; and, while much of this information will only be of interest to tax professionals, there are some important takeaways for U.S. taxpayers as well. In this article, Virginia tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, discusses 10 of the most notable statistics of which taxpayers should be aware:

Key Figures for U.S. Taxpayers from the IRS’ 2021 Data Book

1. Percent of Individual Tax Returns Audited: 0.55 Percent

Through the end of the 2021 fiscal year, the IRS had audited 0.55 percent of all individual tax returns filed between 2011 and 2019.

2. Percent of Corporate Tax Returns Audited: 0.92 Percent

Through the end of the 2021 fiscal year, the IRS had audited 0.92 percent of all corporate tax returns filed between 2011 and 2019.

3. Percent of Tax Returns Audited with Reported Income of $10 Million or More: 8.9 Percent

While the IRS has examined just 0.55 percent of all individual tax returns filed between 2011 and 2019, it has audited 8.9 percent of all taxpayers who reported income of $10 million or more during one or more of these years.

4. IRS Audits Closed in 2021: 738,959

The IRS closed 738,959 tax audits in 2021. These audits resulted in recommended additional tax of approximately $26.8 billion.

5. Percent of Taxpayers Who Disputed Their Audit Results: 1.8 Percent

Of the 738,959 taxpayers who received audit determinations in 2021, just 13,725, or 1.8 percent, disputed their audit results. Notably, however, these disputed audits account for approximately 42 percent of the IRS’ total recommended additional tax for the year.

6. Notices for Math Errors: 12.3 Million

In 2021, the IRS sent more than 12.3 million notices to taxpayers for more than 12.9 million math errors identified on their 2020 tax year returns.

7. Criminal Investigations Targeting U.S. Taxpayers: 2,766

In 2021, the IRS closed 2,766 criminal investigations. These included 1,052 legal-source tax crime investigations, 979 illegal-source financial crime investigations, and 735 narcotics-related financial crime investigations.

8. Percent of Legal-Source Tax Crime Investigations Resulting in Referrals for Prosecution: Approximately 55 Percent

Of the 1,052 legal-source tax crime investigations the IRS closed in 2021, only about 55 percent resulted in referrals for prosecution by the U.S. Department of Justice (DOJ). The percentage of cases involving illegal-source and narcotics-related financial crimes referred for prosecution was significantly higher (approximately 80 percent).

9. Third-Party Information Returns: 4.7 Billion

The IRS received more than 4.7 billion third-party information returns in 2021. These are returns filed by banks and other entities that the IRS uses to verify the accuracy of taxpayers’ income tax filings.  

10. Cryptocurrency Seized By the IRS: More than $1 Billion

The IRS seized more than $1 billion in cryptocurrency from U.S. and foreign citizens in 2021. This shows that cryptocurrency remains a top enforcement priority for the IRS.

Schedule a Confidential Consultation with Virginia Tax Lawyer Kevin E. Thorn

Virginia tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, represents individuals and businesses in all civil and criminal matters involving the IRS. If you would like to speak with Mr. Thorn in confidence, call us at 703-752-3752, email ket@thornlawgroup.com or contact us confidentially online today.