IRS Data Book Highlights Recent Enforcement Actions and Priorities

The Internal Revenue Service (IRS) released its 2024 Data Book at the end of May. While the Data Book contains filing statistics, taxpayer survey results, and other general information about the IRS’ administration of the federal tax system, it also highlights some of the agency’s recent enforcement actions and priorities. This provides some important insights for taxpayers, as Boston IRS tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, explains.

IRS CI Initiated 2,667 Investigations (and closed 2,481 Investigations) in FY2024

According to the 2024 Data Book, IRS Criminal Investigation (IRS CI) initiated 2,667 investigations last year. It also closed 2,481 investigations during the year, with 1,794 of these investigations resulting in referrals for prosecution. The IRS divides its investigations into three broad categories:

• Legal Source Tax Crimes – IRS CI opened 986 investigations and closed 896 investigations into legal source tax crimes in fiscal year 2024.
• Illegal Source Financial Crimes – IRS CI opened 1,054 investigations and closed 983 investigations into illegal source financial crimes in fiscal year 2024.
• Narcotics-Related Financial Crimes – IRS CI opened 627 investigations and closed 602 investigations into narcotics-related financial crimes in fiscal year 2024.

It is noteworthy that the majority of IRS CI’s investigations focus on non-tax-related crimes (although they may involve tax crimes as well). It is also noteworthy that of the investigation targets who were sentenced in fiscal year 2024, 75.7 percent were sentenced to federal prison time. The highest percentage of prison sentences came in cases involving narcotics-related financial crimes (81.8 percent).

The Vast Majority of the IRS’ Collection Efforts Focused on Returns Filed with Additional Tax Due

In fiscal year 2024, the IRS collected $120.2 billion in unpaid assessments on federal tax returns filed with additional tax due. This contrasts sharply with the amount the IRS collected from taxpayers with delinquent returns, which stands at just $3.2 billion. While the IRS has highlighted its efforts to target delinquent filers in recent years, this makes clear that targeting underpayment of tax liability remains a top enforcement priority.

Employment and Business Income Tax Violations Account for the Majority of Civil Penalties

The IRS assessed a total of $84.1 billion in civil penalties in fiscal year 2024. Of these penalties, the majority were imposed for employment tax and business income tax violations. Civil penalties for individual and trust income tax violations accounted for the next-largest portion, followed by violations involving estate and gift taxes, nonreturn penalties, excise taxes and tax-exempt organizations.

The Percentage of Accepted Offers in Compromise Dropped Sharply

In another notable development, the percentage of offers in compromise that the IRS accepted dropped sharply in fiscal year 2024. While this percentage hovered around 40 percent for the last decade, it dropped to just 21 percent last year. Of the 33,591 offers in compromise submitted, the IRS accepted just 7,199, with a total collection value of $163.4 million.

Request a Confidential Consultation with Boston IRS Tax Lawyer Kevin E. Thorn

Boston IRS tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, represents individuals, businesses and other organizations in all IRS compliance and enforcement matters. To request a confidential consultation, please call 617-692-2989 or inquire online today.