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Fun Facts About the 2010 Tax Season

Posted By Jim On 04/04/2011 @ 7:42 am In Taxes | 4 Comments

If you’re a personal finance stats junkie like me, you’d love the IRS Data Book [3]. It is chock full of fun and interesting statistics that give you a glimpse of one of the more private havens in one’s life – their tax return. While you can’t sneak a peek at your neighbor’s return, you can guess some interesting facts about American society through our tax returns.

I take a romp through the IRS Data Book and pull out a few fun statistics that I found interesting, or surprising, and I hope you enjoy them too. All of the data is taken from the Excel spreadsheets for Fiscal Year 2010 but they also issue a PDF [4] that summarizes some of the higher level statistics.

Tax Returns

The IRS processed 230 million tax returns in 2010, down 2.6% from 236.5 million returns in 2009. California accounting for 27.2 million of those returns, the most of any state. Texas sported the second most returns with 17 million followed by a near neck and neck competition for third between Florida (15.3 million) and New York (15.2 million).

Can you guess the state with the fewest returns? If you guessed Alaska, you’d be wrong (that’d be my guess, but they’re actually 4th fewest). Wyoming had the fewest with 502,569 returns, with Vermont coming in second with 560,428. Third place goes to North Dakota with 582,303 and fourth is secured by Alaska with 583,713 returns.

Can you guess which state has the most estate tax returns? If you guessed Florida, you’d be wrong… California simply has too many people! California had 22,668 estate tax returns while Florida came in second with 19,835, barely edging out New York with 19,171.

The Average Tax Refund

The average tax refund [5] for TY2010 was $3,036, which means the average American taxpayer had an extra $253 withheld from their paychecks each month.

Number of Audits

Not all tax examinations [6] are created equal. There are two types of tax audits, field examinations and correspondence examinations. Field examinations involve an agent coming to you and reviewing your documents in person. Correspondence examinations are often automated and involve a CP2000 clarification letter [7].

Of the 142,823,105 returns in TY2010, 1.1% were examined (1,581,394 returns). Of the examinations, 342,762 were field examinations (21.67%) and 1,238,632 were correspondence examinations (78.33%). Not all audits result in a change in tax, in TY2010, 12% of field exams and 14% of correspondence exams resulted in no change.

Incidentally, 8.4% of returns with total positive income of $1,000,000 or more were examined with 28.9% of those returns resulting in no change.

Recommended Additional Tax

With each type of tax return exam, the IRS calculated a “recommended additional tax per return” figure. For example, on a CP2000 letter, the IRS explains the discrepancy and offers its recommendation for how much tax is due. Taxpayers can challenge the letter or they can accept the recommendation, pay the difference, and end the exam. The IRS sums the recommendations to get an idea of how much additional tax they can collect from the examples. Field exams often yield higher recommended values ($20,127) than correspondence exams ($6,594).

The recommended additional tax for all individual returns for TY2010 was over $15 billion.

Delinquent Collection Activities

The IRS doesn’t mess around when it comes to collecting taxes due and they filed over a million Federal tax liens in 2010 with 605 seizures. At the close of 2010, there were still 10,392,000 delinquent accounts accounting for $114,235,064,000 in taxes, penalties, and interest.

If you’re wondering what a delinquent looks like, the majority reason why individual taxpayers are delinquent is because of a failure to pay. 15.5 million of the 37 million civil penalties assessed are for “failure to pay.” Second most frequent is an inaccurate estimated tax payment for the year. Fraud only accounts for 0.0060% of the civil penalties assessed in individual tax returns (this surprised me).

I hope you enjoyed a quick peek into the aggregate pocketbook of the American taxpayer. If you’re a stats junkie like me and taken a look at the tables yourself, was there a statistic in there that you were surprised to see that didn’t make my list?

(Photo: agrilifetoday [8])

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URLs in this post:

[1] Tweet: http://twitter.com/share

[2] Email: mailto:?subject=http://www.bargaineering.com/articles/fun-facts-2010-tax-season.html

[3] IRS Data Book: http://www.irs.gov/taxstats/article/0,,id=102174,00.html

[4] PDF: http://www.irs.gov/pub/irs-soi/10databk.pdf

[5] average tax refund: http://www.bargaineering.com/articles/average-tax-refund.html

[6] tax examinations: http://www.bargaineering.com/articles/how-does-the-irs-pick-tax-returns-to-audit.html

[7] CP2000 clarification letter: http://www.bargaineering.com/articles/irs-cp2000-clarification-letter.html

[8] agrilifetoday: http://www.flickr.com/photos/agrilifetoday/5229193100/sizes/l/

Thank you for reading!