The beginning of February can only mean one thing: Tax season is officially upon us, with W-2s in the mail or already at their destination, and the Internal Revenue Service open for business and processing millions of U.S. tax returns.
Taxes, as Benjamin Franklin once noted, are one of life's only two certainties, along with death. As such, they're often despised along with the agency that handles the collection of them, the IRS.
Image source: Getty Images.
In a Gallup poll conducted last May, respondents were asked to rank nine government agencies on a scale of "excellent/good," "only fair", or "poor" for the job they've been doing. As you can see by the results of the following poll, the IRS ranked in the cellar as the agency with an unfavorable rating based on poor versus excellent/good responses.
|
Agency |
% Excellent/Good |
% Only Fair |
% Poor |
|---|---|---|---|
|
Centers for Disease Control and Prevention |
60% |
27% |
8% |
|
Federal Bureau of Investigation |
55% |
27% |
12% |
|
NASA |
42% |
32% |
10% |
|
Central Intelligence Agency |
40% |
35% |
13% |
|
Food and Drug Administration |
45% |
32% |
21% |
|
Department of Homeland Security |
46% |
28% |
23% |
|
Environmental Protection Agency |
41% |
33% |
21% |
|
Federal Reserve Board |
33% |
34% |
21% |
|
Internal Revenue Service |
27% |
29% |
42% |
Source: Gallup.
There are a lot of reasons for this negative sentiment, including allegations of audit-targeting, the want of many Americans to not have to spend time doing their taxes each year, the general cloud of secrecy that surrounds the IRS, and the fact that the U.S. tax code changes every year. But when all is said and done, these negative views are merely formed by individual opinions.
With that in mind I sought to discover 10 interesting, unique, and incredible facts about the IRS that might put this disliked government agency in an easier-to-understand light.
No. 1: The IRS processed 237,345,350 returns in 2012
According to the IRS Data Book (link opens PDF), which is published annually and is chock-full of data, the IRS received more than 237 million tax filings in 2012, including more than 146 million individual income tax returns, 22.1 million estimate income tax returns, close to 7 million S&C corporation income tax returns, 29.6 million employment tax returns, and a bevy of other tax filings.
Of these filings, 144.6 million of them were processed electronically. The percentage of e-filers is markedly higher for individual tax returns where 81% of all filings were done electronically in 2012. By comparison, the e-file rate was just 40% in 2003.
No. 2: Taxpayers spend 3.8 billion hours annually complying with federal income tax laws
According to the National Taxpayers Union, in 2009 individual taxpayers spent 3.8 billion hours of their time complying with federal tax laws. To put this in another context, utilizing the average hourly private sector earnings of $24.17 for December found on the Bureau of Labor Statistics' website, this means individual taxpayers will theoretically "spend" $91.8 billion this year on complying with the federal tax code.
No. 3: The IRS more than doubled the number of identity theft and fraud prevention workers to 3,000 in 2012
You may feel like all the IRS does is take, take, take, but they're doing a good job of looking after John and Jane Q. Public as well. In 2012, the IRS more than doubled the number of case workers that specialize in preventing identity theft and refund fraud, as well as assisting citizens who fell victim to these practices.
No. 4: IRS revenue collected annually has increased by a factor of nearly 27 since 1960
In 2012, the IRS collected a whopping $2.524 trillion in revenue and cut $373.4 billion in refund checks. What's really stunning is that the $2.524 trillion in tax revenue collected is 26.5 times higher than the $91.8 billion collected by the agency in 1960, according to the IRS Data Book.
For those who are curious, although tax revenue collection tend to move upwards over time as U.S. GDP rises, 2008 still stands atop the mountain as the year with the highest gross tax dollars collected by the IRS, at $2.745 trillion.
No. 5: There are nearly 1.5 million tax-exempt organizations recognized by the IRS
Though we may personally moan and groan over paying out taxes, the IRS currently recognizes 1,484,818 organizations as 501(c)s, or tax-exempt. Of these tax-exempt organization, religious and/or charitable organizations comprise the majority at 1.082 million with social welfare, labor and agriculture, and business leagues coming in a very, very distant second.
To provide some context to this figure, the IRS approved 52,608 501(c) applications just in 2012, although the total number of tax-exempt organization actually fell by roughly 10,000 year-over-year. By comparison, there are only 50,046 labor and agriculture organizations in total!
No. 6: The U.S. tax code is approximately 3.7 million words in length
Congress, perhaps the only government agency with a lower approval rating than the IRS, writes the tax code, but it's up to the IRS to understand it and enforce it. One can only imagine what training an IRS agent will need to go through, with the tax code containing approximately 3.7 million words, according to the Taxpayer Advocate Service. Given that Amazon.com's statistics note that the median length for a novel is 64,000 words, you'd be looking at a tax code that takes up 58 novels!
Were that not enough, a quick search of the IRS website will reveal the ability to download 1,977 different forms and publications from its website. Don't believe me? Have a look for yourself.
No. 7: Tax audits are commonly conducted in a reverse bell curve based on adjusted gross income
There is no exact formula to who does and doesn't receive an audit, but there is unequivocal truth in the statement that audit probability rises in the lowest and highest income brackets, just like an reverse bell curve. Higher-income earners are IRS targets because errors here could result in a considerable amount of extra tax revenue being collected. However, Earned Income Tax Credit fraud has run rampant for years, so lower-income earners are also more susceptible to an audit than middle-class Americans.
Based on the IRS audits conducted in 2012, Americans who earned $50,000 to $100,000 faced an audit rate of just 0.64%, while those who had no adjusted gross income, or those who made north of $10 million faced audit rates of 2.67% and 27.37%, respectively.
No. 8: Tax form mistakes are 41 times more common on paper forms than through e-filing
There are some easy ways to flag an IRS audit, such as an inordinate amount of write-offs relative to reported income, but perhaps none is greater than turning in a paper form as opposed to filing electronically.
According to TurboTax, between illegible handwriting, boxes that are left blank, and human calculating errors, the error rate on paper returns is about 21%, compared with just 0.5% for electronically prepared software which allows for e-filing. Here's a not-so-obvious hint: If you want to reduce your chance of an audit, e-file your tax return!
No. 9: Nearly 95,000 people work for the IRS
Based on data found in The Wall Street Journal in October shortly after the government shutdown began, there were 94,516 employees working for the IRS. Despite numerous myths, the IRS's total number of employees is dwarfed by the Department of Defense and Department of Homeland Security. However, the IRS does employ more people than the Department of Health and Human Services, the agency responsible for the oversight of Obamacare and its federally run website, Healthcare.gov, the Social Security Administration, and the Department of the Interior.
No. 10: Two-thirds of IRS employees would recommend working for the IRS to a friend
Lastly, public opinion of the job the IRS is doing may be overwhelmingly poor, but if you asked IRS employees how they felt about their jobs, two-thirds of them would recommend it to a friend, according to employee review website Glassdoor.com.
The IRS itself has a number of wide-ranging job titles, from data transcribers, who can make $12-$14 per hour to revenue officers and internal revenue agents, who average approximately $56,000 and $74,000 in salary annually. In other words, working for the iRS could net you more than the national average in yearly pay, and it's recommended 2-to-1 by people who work there. It may not be such a bad place after all!
