United States General Accounting Office
GAO Report to the Joint Committee on
Taxation
June 1999
TAX
ADMINISTRATION
IRS’ Abatement of
Assessments in Fiscal
Years 1995-98
GAO/GGD-99-77
GAO United States
General Accounting Office
Washington, D.C. 20548
General Government Division
B-280532
June 4, 1999
The Honorable Bill Archer
Chairman
The Honorable William V. Roth, Jr.
Vice Chairman
Joint Committee on Taxation
Each year, the Internal Revenue Service (IRS) abates tens of billions of
1
dollars in tax, penalty, and interest assessments. That is, IRS reduces
these assessments on taxpayers’ accounts. Abatements are important
because they can correct tax, penalty, and interest amounts that have been
overassessed due to errors by IRS or taxpayers. For some types of
abatements, however, the assessments are correct, but IRS abates them for
various other reasons. For example, penalties are abated for taxpayers
who can prove they had reasonably relied on written advice from IRS.
Because IRS has not developed comprehensive information on the number
and amount of various types of past abatements, you asked us to provide
such information, which might help the Committee fulfill a requirement in
the IRS Restructuring and Reform Act of 1998 that it report on the
administration of penalty and interest assessments by July 22, 1999. On the
basis of your February 2, 1999, request, our objectives were to determine
for individual and business tax returns (1) the number and amount of
various types of tax, penalty, and interest abatements made during fiscal
years 1995 through 1998 and (2) selected characteristics of the abatements,
such as the tax years of abated assessments, taxpayers’ use of paid tax
preparers, and IRS’ actions--such as audit or collection actions--before
2
abating assessments.
Our analysis of IRS records on individual and business abatements in fiscal
Results years 1995 through 1998 showed that the number and amount of
abatements of tax, penalty, and interest assessments stayed fairly
constant. Each year, IRS abated, on average, about 10 million assessments
worth about $30 billion. (See tables in app. I; unless noted otherwise,
1
Taxpayers essentially assess themselves when they voluntarily report the amount of taxes owed on a
tax return. IRS may assess additional taxes owed, as well as penalty and interest amounts, as a result
of an enforcement program, such as auditing tax returns that appear to have misreported income,
deductions, credits, exemptions, or other tax issues.
2
As also requested in this letter, we are developing a separate report on IRS’ basic abatement processes
and any IRS efforts to improve these processes.
Page 1 GAO/GGD-99-77 IRS’ Abatement of Assessments
B-280532
tables in the appendixes include abatements of tax, penalty, and interest
assessments.)
To illustrate the types of analysis we did on individual and business
abatements, for just the individual taxpayers, IRS abated 7.1 million
3
assessments in fiscal year 1998 —2.5 million tax, 2.4 million penalty, and
2.2 million interest assessments. These abatements totaled about $7.8
billion—$5.5 billion in tax, $1.5 billion in penalty, and $0.8 billion in
4
interest assessments. For the 2.4 million penalty abatements, 1.4 million
were failure-to-pay penalties. Of the $1.5 billion in penalty abatements,
5
$676 million were miscellaneous civil tax penalties.
A variety of characteristics were associated with the abatements for
individuals and businesses during fiscal years 1995-98. For example, the 7.1
million individual abatements in fiscal year 1998 were associated with the
following characteristics:
• About 80 percent of the 7.1 million abatements (as well as the abated
amounts) involved individuals who predominantly reported nonbusiness
income, such as wages, rather than business income from self-
employment.
• The 7.1 million abatements were associated with 4.3 million filed returns.
Of these returns, 52 percent were joint returns and 54 percent used a paid
preparer.
• Of the 7.1 million abatements, about 19 percent were associated with a tax
return with an additional assessment after the one originally reported and
about 78 percent were associated with a previous collection action.
• Of the 7.1 million abatements, 64 percent involved assessments for tax
years after 1995, while 9 percent involved assessments for tax years before
1992.
Appendixes II and III provide detailed information for all 4 years on the
number and amount of abatements for individual and business returns.
Appendixes IV and V provide information about the characteristics of
abatements for individual and business returns during fiscal years 1995
3
It is important to recognize that an individual taxpayer could receive multiple abatements in a fiscal
year, such as when an abated tax assessment also leads to abated penalty and interest assessments.
4
IRS data extracts that we used did not allow us to link specific abatements to related assessments. As
a result, we could not determine how much of the various types of assessments had been abated.
5
These miscellaneous penalties include the trust fund penalty that applies when a business does not
properly deposit its employment taxes. IRS is to assess the penalty against all responsible individuals
associated with that business until these taxes are deposited.
Page 2 GAO/GGD-99-77 IRS’ Abatement of Assessments
B-280532
through 1998. Appendixes VI and VII provide information about
abatements on tax returns associated with one of two IRS activities—
creating substitute returns for nonfilers and making additional
assessments.
Section 6404 of the Internal Revenue Code (IRC) authorizes IRS to abate
Background an assessment under certain conditions. For example, IRS can abate an
erroneous assessment, which can be caused by either IRS or the taxpayer.
IRS does not have automated data available on the root causes of these
errors. Some examples of errors follow.
• A taxpayer made an error on the original return, such as underreporting a
deduction, and filed an amended return. If IRS verified the correctness of
the amended return, it would abate the overassessed portion of the
original tax reported.
• In an audit, IRS did not find adequate support for certain deductions and
ultimately assessed additional taxes. Afterward, the taxpayer challenged
6
this assessment by providing documentation to support the deductions. If
IRS found the documentation valid, IRS would abate the overassessment.
• IRS might assess taxes on the basis of evidence that IRS had received
about income paid to an individual who had not filed an income tax return.
IRS would then notify the taxpayer of the assessment. If the taxpayer then
filed a return with a lower tax liability and IRS confirmed this new liability,
IRS would abate any overassessment.
In addition, IRS can abate unnecessary assessments of the correct amount
in special situations. That is, IRS has made the assessment multiple times,
knowing that any unnecessary assessments will eventually be abated. In
these situations, IRS knows that a tax is owed from among multiple
taxpayers. IRS would assess each of these taxpayers and then abate any
unnecessary assessments after the tax is paid.
IRS also abates correct assessments for other reasons. For example, IRS
abates certain penalties when a taxpayer provides a reasonable cause
(such as a nonfinancial hardship, or incorrect IRS written advice) for not
meeting a tax responsibility, such as paying an assessment. Or, a taxpayer
6
Before IRS assesses additional taxes that an audit recommends, a taxpayer can dispute the
recommended assessment through IRS’ Office of Appeals. Also, upon receiving notice of a proposed
assessment, a taxpayer has 90 days (150 days if outside the United States) to file a petition with the Tax
Court for a redetermination of the proposed adjustment. Some taxpayers, for whatever reasons,
bypass these options, which result in the recommended taxes being assessed, along with any related
penalty and interest amounts.
Page 3 GAO/GGD-99-77 IRS’ Abatement of Assessments
B-280532
can claim a deduction by carrying back net operating losses incurred in
other tax years to reduce the liability for a previous tax year. And IRS may
abate an assessment for unpaid taxes that involved the correct amount but
was made after the time period allowed for assessing additional tax
liabilities.
Regardless of the reason, when IRS abates a tax or penalty assessment, its
computers generally abate any other associated penalty and interest
assessments. IRS records data on abatements (as well as other tax activity,
such as assessments and payments) in a taxpayer’s account on IRS’
masterfile. IRS maintains both an individual and a business masterfile.
For both objectives, we requested data extracts from IRS’ individual and
Scope and business masterfiles to identify the abatements received during fiscal years
Methodology 1995 through 1998 by individuals and businesses. These IRS data identified
the number and dollar amounts for each type of tax, penalty, or interest
abatement. The data included specific characteristics about each
abatement, such as the type and year of the tax return, the income level
and filing status of the taxpayer, the taxpayer’s use of a paid preparer, and
the IRS actions taken on the tax return that had an assessment abated,
such as an audit or collection action.
The masterfile data extracts we received had 43 million abatement
transactions that totaled $120 billion for the 4 fiscal years. Using the
results of our various analyses, we created a series of tables on the number
and amount of abatements as well as the characteristics associated with
the abatements. The tables for these 4 fiscal years are provided in
7
appendixes I through VII to this report.
We did not attempt to verify the reliability of the masterfile data. However,
we talked to IRS National Office officials on data abnormalities we found.
To the extent that these abnormalities affected our analyses, we identified
them in footnotes to the tables in this report. Further, IRS’ data extracts
did not allow us to link specific abatements to the related assessments in
various years. As a result, we could not determine how much of the
various types of assessments had been abated, particularly by year. Nor
7
We also did limited analyses on transactions that we did not include in our abatement totals but that
reduced the taxes owed. In general, these transactions forgave or eliminated an unpaid tax amount
even though the assessment was correct. These transactions included eliminating a tax debt because
the statutory period (generally 10 years) for collecting the debt had expired or because the taxpayer
had gone through bankruptcy. Our analyses of these “other” transactions are separate from our
abatement analyses and are reported in app. VIII.
Page 4 GAO/GGD-99-77 IRS’ Abatement of Assessments
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could we analyze why an assessment was abated or whether the
abatement was valid.
We performed our audit at IRS headquarters in Washington, D.C., and IRS’
Kansas City Service Center. Our work was done between January and May
1999 in accordance with generally accepted government auditing
standards.
We requested comments on a draft of this report from the Commissioner
Agency Comments of Internal Revenue. On May 21, 1999, we received written comments from
IRS’ Chief Operations Officer. (See app. IX.)
IRS’ letter indicated an agreement with our draft report. The letter said
that the statistical tables in our report were consistent with IRS’ abatement
data. Further, the letter commented that the report provides good
information on aspects of abatements.
We are sending copies of this report to Representative Charles B. Rangel,
Ranking Minority Member, House Committee on Ways and Means, and
Senator Daniel P. Moynihan, Ranking Minority Member, Senate Committee
on Finance. We are also sending copies to the Honorable Jacob Lew,
Director, Office of Management and Budget; the Honorable Robert E.
Rubin, Secretary of the Treasury; the Honorable Charles O. Rossotti,
Commissioner of Internal Revenue; and other interested parties. We will
also send copies to those who request them.
The major contributors to this report are listed in appendix X. If you or
your staff have any questions concerning this report, please contact me or
Tom Short, Assistant Director, on (202) 512-9110.
Cornelia M. Ashby
Associate Director, Tax Policy and
Administration Issues
Page 5 GAO/GGD-99-77 IRS’ Abatement of Assessments
Contents
Letter 1
Appendix I 16
Overview of
Abatements of Tax,
Penalty, and Interest
Assessments on
Individual and
Business Returns
Appendix II 18
Abatements of Tax,
Penalty, and Interest
Assessments on
Individual Returns
Appendix III 23
Abatements of Tax,
Penalty, and Interest
Assessments on
Business Returns
Appendix IV 29
Abatements of Penalty
and Interest
Assessments on
Individual and
Business Tax Returns
Page 6 GAO/GGD-99-77 IRS’ Abatement of Assessments
Contents
Appendix V 72
Abatements of Tax
Assessments on
Individual and
Business Tax Returns
Appendix VI 77
Abatements
Associated With Tax,
Penalty, and Interest
Assessments on
Substitute for Returns
Appendix VII 79
Abatements of Tax,
Penalty, and Interest
Assessments
Associated With Tax
on Original Return
Appendix VIII 84
Other Types of
Abatements
Associated With
Unpaid Assessments
on Individual and
Business Tax Returns
Appendix IX 86
Comments From the
Internal Revenue
Service
Page 7 GAO/GGD-99-77 IRS’ Abatement of Assessments
Contents
Appendix X 87
Major Contributors to
This Report
Tables Table I.1: Number and Amount of Abatements by Fiscal 16
Year of Abatement–Individual and Business Tax
Returns
Table I.2: Number and Amount of Abatements by Type of 16
Return and Fiscal Year of Abatement–Individual and
Business Tax Returns
Table I.3: Number of Returns and Taxpayers Receiving 17
Abatements by Fiscal Year of Abatement–Individual
and Business Tax Returns
Table II.1: Number and Amount of Abatements by Fiscal 18
Year of Abatement–Individual Tax Returns
Table II.2: Number and Amount of Abatements by Income 18
Level and Fiscal Year of Abatement–Individual Tax
Returns
Table II.3: Number of Abatements by Tax Year and Fiscal 19
Year of Abatement–Individual Tax Returns
Table II.4: Amount of Abatements by Tax Year and Fiscal 19
Year of Abatement–Individual Tax Returns
Table II.5: Distribution of Returns With Abatements by 20
Filing Status and Fiscal Year of Abatement–Individual
Tax Returns
Table II.6: Distribution of Returns With Abatements by 20
Selected Characteristic and Fiscal Year of Abatement–
Individual Tax Returns
Table II.7: Distribution of Abatements on Returns 21
Associated With Selected IRS Activity by Fiscal Year of
Abatement–Individual Tax Returns
Table II.8: Distribution of Amount of Abatements on 22
Returns Associated With Selected IRS Activity by
Fiscal Year of Abatement–Individual Tax Returns
Table III.1: Number and Amount of Abatements by Fiscal 23
Year of Abatement–Business Tax Returns
Table III.2: Number and Amount of Abatements by Fiscal 23
Year of Abatement–Corporate Income Tax Returns
Table III.3: Number and Amount of Abatements by Fiscal 24
Year of Abatement–Employment Tax Returns
Page 8 GAO/GGD-99-77 IRS’ Abatement of Assessments
Contents
Table III.4: Number and Amount of Abatements by Fiscal 24
Year of Abatement–Other Business Tax Returns
Table III.5: Number and Amount of Abatements by Asset 25
Size and Fiscal Year of Abatement–Corporate Income
Tax Returns
Table III.6: Number of Abatements by Tax Year and 26
Fiscal Year of Abatement–Business Tax Returns
Table III.7: Amount of Abatements by Tax Year and Fiscal 26
Year of Abatement–Business Tax Returns
Table III.8: Distribution of Abatements on Returns With 27
Selected IRS Activity by Fiscal Year of Abatement–
Business Tax Returns
Table III.9: Distribution of Amounts of Abatements on 28
Returns With Selected IRS Activity by Fiscal Year of
Abatement–Business Tax Returns
Table IV.1: Number and Percent of Penalty and Interest 29
Abatements by Fiscal Year of Abatement—Individual
and Business Tax Returns
Table IV.2: Amount and Percent of Penalty and Interest 30
Abatements by Fiscal Year of Abatement—Individual
and Business Tax Returns
Table IV.3: Percent of Penalty and Interest Abatements 31
Computed Manually and by Computer by Fiscal Year of
Abatement—Individual and Business Tax Returns
Table IV.4: Percent of Amount of Penalty and Interest 32
Abatements Computed Manually and by Computer by
Fiscal Year of Abatement—Individual and Business
Tax Returns
Table IV.5: Number and Percent of Penalty and Interest 33
Abatements by Fiscal Year of Abatement—Individual
Tax Returns
Table IV.6: Amount and Percent of Penalty and Interest 34
Abatements by Fiscal Year of Abatement—Individual
Tax Returns
Table IV.7: Percent of Penalty and Interest Abatements 35
Computed Manually and by Computer by Fiscal Year of
Abatement—Individual Tax Returns
Table IV.8: Percent of Amount of Penalty and Interest 36
Abatements Computed Manually and by Computer by
Fiscal Year of Abatement—Individual Tax Returns
Table IV.9: Number and Amount of Penalty Abatements 37
by Income Level and by Fiscal Year of Abatement—
Individual Tax Returns
Page 9 GAO/GGD-99-77 IRS’ Abatement of Assessments
Contents
Table IV.10: Number and Amount of Interest Abatements 38
by Income Level and by Fiscal Year of Abatement—
Individual Tax Returns
Table IV.11: Number of Penalty Abatements by Tax Year 39
and Fiscal Year of Abatement—Individual Tax Returns
Table IV.12: Amount of Penalty Abatements by Tax Year 39
and Fiscal Year of Abatement—Individual Tax Returns
Table IV.13: Number of Interest Abatements by Tax Year 40
and Fiscal Year of Abatement—Individual Tax Returns
Table IV.14: Amount of Interest Abatements by Tax Year 40
and Fiscal Year of Abatement—Individual Tax Returns
Table IV.15: Distribution of Returns With Penalty and 41
Interest Abatements by Filing Status and Fiscal Year of
Abatement—Individual Tax Returns
Table IV.16: Distribution of Returns With Penalty and 41
Interest Abatements by Selected Characteristic and
Fiscal Year of Abatement—Individual Tax Returns
Table IV.17: Distribution of Returns With Penalty 42
Abatements by Selected Characteristic and Fiscal Year
of Abatement—Individual Tax Returns
Table IV.18: Distribution of Returns With Interest 42
Abatements by Selected Characteristic and Fiscal Year
of Abatement—Individual Tax Returns
Table IV.19: Distribution of Returns With Failure to File 43
Penalty Abatements by Selected Characteristic and
Fiscal Year of Abatement—Individual Tax Returns
Table IV.20: Distribution of Returns With Estimated 43
Payment Penalty Abatements by Selected
Characteristic and Fiscal Year of Abatement—
Individual Tax Returns
Table IV.21: Distribution of Returns With Failure to Pay 43
Penalty Abatements by Selected Characteristic and
Fiscal Year of Abatement—Individual Tax Returns
Table IV.22: Distribution of Number of Penalty and 44
Interest Abatements on Returns Associated With
Selected IRS Activity by Fiscal Year of Abatement—
Individual Tax Returns
Table IV.23: Distribution of Amount of Penalty and 45
Interest Abatements on Returns Associated With
Selected IRS Activity by Fiscal Year of Abatement—
Individual Tax Returns
Page 10 GAO/GGD-99-77 IRS’ Abatement of Assessments
Contents
Table IV.24: Distribution of Number of Penalty 46
Abatements on Returns Associated With Selected IRS
Activity by Fiscal Year of Abatement—Individual Tax
Returns
Table IV.25: Distribution of Amount of Penalty 47
Abatements on Returns Associated With Selected IRS
Activity by Fiscal Year of Abatement—Individual Tax
Returns
Table IV.26: Distribution of Number of Interest 48
Abatements on Returns Associated With Selected IRS
Activity by Fiscal Year of Abatement—Individual Tax
Returns
Table IV.27: Distribution of Amount of Interest 49
Abatements on Returns Associated With Selected IRS
Activity by Fiscal Year of Abatement—Individual Tax
Returns
Table IV.28: Number and Percent of Penalty and Interest 50
Abatements by Fiscal Year of Abatement—Business
Tax Returns
Table IV.29: Amount and Percent of Penalty and Interest 51
Abatements by Fiscal Year of Abatement–Business Tax
Returns
Table IV.30: Percent of Penalty and Interest Abatements 52
Computed Manually and by Computer by Fiscal Year of
Abatement—Business Tax Returns
Table IV.31: Percent of Amount of Penalty and Interest 53
Abatements Computed Manually and by Computer by
Fiscal Year of Abatement—Business Tax Returns
Table IV.32: Number and Percent of Penalty and Interest 54
Abatements by Fiscal Year of Abatement—Corporate
Income Tax Returns
Table IV.33: Amount and Percent of Penalty and Interest 55
Abatements by Fiscal Year of Abatement—Corporate
Income Tax Returns
Table IV.34: Number and Percent of Penalty and Interest 56
Abatements by Fiscal Year of Abatements—
Employment Tax Returns
Table IV.35: Amount and Percent of Penalty and Interest 57
Abatements by Fiscal Year of Abatement—
Employment Tax Returns
Table IV.36: Number and Percent of Penalty and Interest 58
Abatements by Fiscal Year of Abatement—Other
Business Tax Returns
Page 11 GAO/GGD-99-77 IRS’ Abatement of Assessments
Contents
Table IV.37: Amount and Percent of Penalty and Interest 59
Abatements by Fiscal Year of Abatement–Other
Business Tax Returns
Table IV.38: Number and Amount of Penalty Abatements 60
by Asset Size and Fiscal Year of Abatement—
Corporate Income Tax Returns
Table IV.39: Number and Amount of Interest Abatements 61
by Asset Size and Fiscal Year of Abatement–Corporate
Income Tax Returns
Table IV.40: Number of Penalty Abatements by Tax Year 62
and Fiscal Year of Abatement—Business Tax Returns
Table IV.41: Amount of Penalty Abatements by Tax Year 62
and Fiscal Year of Abatement—Business Tax Returns
Table IV.42: Number of Interest Abatements by Tax Year 63
and Fiscal Year of Abatements—Business Tax Returns
Table IV.43: Amount of Interest Abatements by Tax Year 63
and Fiscal Year of Abatement—Business Tax Returns
Table IV.44: Number of Penalty Abatements by Tax Year 64
and Fiscal Year of Abatement—Corporate Income Tax
Returns
Table IV.45: Amount of Penalty Abatements by Tax Year 64
and Fiscal Year of Abatement—Corporate Income Tax
Returns
Table IV.46: Number of Interest Abatements by Tax Year 65
and Fiscal Year of Abatement—Corporate Income Tax
Returns
Table IV.47: Amount of Interest Abatements by Tax Year 65
and Fiscal Year of Abatement—Corporate Income Tax
Returns
Table IV.48: Number of Penalty Abatements by Tax Year 66
and Fiscal Year of Abatement—Employment Tax
Returns
Table IV.49: Amount of Penalty Abatements by Tax Year 67
and Fiscal Year of Abatement—Employment Tax
Returns
Table IV.50: Number of Interest Abatements by Tax Year 68
and Fiscal Year of Abatement—Employment Tax
Returns
Table IV.51: Amount of Interest Abatements by Tax Year 69
and Fiscal Year of Abatement—Employment Tax
Returns
Page 12 GAO/GGD-99-77 IRS’ Abatement of Assessments
Contents
Table IV.52: Number of Penalty Abatements by Tax Year 70
and Fiscal Year of Abatement—Other Business Tax
Returns
Table IV.53: Amount of Penalty Abatements by Tax Year 70
and Fiscal Year of Abatement—Other Business Tax
Returns
Table IV.54: Number of Interest Abatements by Tax Year 71
and Fiscal Year of Abatement—Other Business Tax
Returns
Table IV.55: Amount of Interest Abatements by Tax Year 71
and Fiscal Year of Abatement—Other Business Tax
Returns
Table V.1: Number and Distribution of Tax Abatements 72
by Fiscal Year of Abatement—Individual and Business
Tax Returns
Table V.2: Amount and Distribution of Tax Abatements 72
by Fiscal Year of Abatement—Individual and Business
Tax Returns
Table V.3: Number and Amount of Tax Abatements by 73
Fiscal Year of Abatement—Individual Tax Return
Table V.4: Number and Amount of Tax Abatements by 73
Fiscal Year of Abatement—Business Tax Returns
Table V.5: Number and Amount of Tax Abatements by 74
Fiscal Year of Abatement—Corporate Income Tax
Returns
Table V.6: Number and Amount of Non-Examination Tax 74
Abatements by Asset Size and Fiscal Year of
Abatement—Corporate Income Tax Returns
Table V.7: Number and Amount of Examination Tax 75
Abatements by Asset Size and Fiscal Year of
Abatement—Corporate Income Tax Returns
Table V.8: Number and Amount of Tax Abatements Due 76
to Net Operating Loss Carryback by Asset Size and
Fiscal Year of Abatement—Corporate Income Tax
Returns
Table VI.1: Number and Amount of Abatements 77
Associated With Assessments on Substitute for Returns
by Fiscal Year of Abatement–Individual and Business
Tax Returns
Table VI.2: Number and Amount of Abatements 77
Associated With Assessments on Substitute for Returns
by Fiscal Year of Abatement–Individual Tax Returns
Page 13 GAO/GGD-99-77 IRS’ Abatement of Assessments
Contents
Table VI.3: Number of Abatements Associated With 78
Assessments on Substitute for Returns by Tax Year and
Fiscal Year of Abatement–Individual Tax Returns
Table VI.4: Amount of Abatements Associated With 78
Assessments on Substitute for Returns by Tax Year and
Fiscal Year of Abatement–Individual Tax Returns
Table VII.1: Number and Amount of Abatements 79
Associated With Tax on Original Return by Fiscal Year
of Abatement–Individual and Business Tax Returns
Table VII.2: Number and Amount of Abatements 79
Associated With Tax on Original Return by Fiscal Year
of Abatement–Individual Tax Returns
Table VII.3: Number and Amount of Abatements 80
Associated With Tax on Original Return by Income
Level and Fiscal Year of Abatement–Individual Tax
Returns
Table VII.4: Number of Abatements Associated With Tax 81
on Original Return by Tax Year and Fiscal Year of
Abatement–Individual Tax Returns
Table VII.5: Amount of Abatements Associated With Tax 81
on Original Return by Tax Year and Fiscal Year of
Abatement–Individual Tax Returns
Table VII.6: Distribution of Returns With Abatements 82
Associated With Tax on Original Return by Filing
Status and Fiscal Year of Abatement–Individual Tax
Returns
Table VII.7: Distribution of Returns With Abatements 82
Associated With Tax on Original Return by Selected
Characteristic and Fiscal Year of Abatement–
IndividualTax Returns
Table VII.8: Distribution of Number of Abatements 83
Associated With Tax on Original Return by Selected
IRS Activity and Fiscal Year of Abatement–Individual
Tax Returns
Table VII.9: Distribution of Amount of Abatements 83
Associated With Tax on Original Return by Selected
IRS Activity and Fiscal Year of Abatement–Individual
Tax Returns
Table VIII.1: Number and Amount of Other Types of 84
Abatements Associated With Unpaid Assessments–
Individual and Business Tax Returns
Page 14 GAO/GGD-99-77 IRS’ Abatement of Assessments
Contents
Table VIII.2: Number and Amount of Other Types of 85
Abatements Associated With Unpaid Assessments–
Individual Tax Returns
Table VIII.3: Number and Amount of Other Types of 85
Abatements Associated With Unpaid Assessments–
Business Tax Returns
Abbreviations
IRC Internal Revenue Code
IRS Internal Revenue Service
Page 15 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix I
Overview of Abatements of Tax, Penalty, and
Interest Assessments on Individual and
Business Returns
Table I.1: Number and Amount of Abatements by Fiscal Year of Abatement–Individual and Business Tax Returns
Dollars in Millions Abatement type
Tax Penalty Interest Total
Fiscal year of abatement Number Amount Number Amount Number Amount Number Amount
1995 2,641,271 $20,820 4,386,838 $4,925 3,074,732 $2,647 10,102,841 $28,393
1996 2,443,001 22,489 4,390,416 6,009 3,216,721 3,195 10,050,138 31,692
1997 3,431,358 22,119 4,251,869 5,540 3,507,147 2,788 11,190,374 30,447
1998 3,098,672 22,240 4,705,481 4,795 3,532,125 2,137 11,336,278 29,172
Total 11,614,302 $87,668 17,734,604 $21,269 13,330,725 $10,767 42,679,631 $119,704
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income. Business tax returns
include corporate income tax, various employment taxes, and other types of returns on IRS’ business
master file.
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
Source: GAO compilation of IRS data.
Table I.2: Number and Amount of Abatements by Type of Return and Fiscal Year of Abatement–Individual and Business Tax
Returns
Dollars in Millions Fiscal year of abatement
1995 1996 1997 1998 Total
Type of return Number Amount Number Amount Number Amount Number Amount Number Amount
Individual income
tax 5,559,952 $6,773 5,410,556 $6,848 6,840,701 $7,433 7,088,933 $7,676 24,900,142 $28,731
Business
Corporate income tax 430,927 $12,753 435,554 $15,325 430,671 $13,142 432,161 $12,649 1,729,313 $53,870
a
Employment tax 3,499,256 4,783 3,272,151 5,693 3,145,880 6,472 3,173,406 5,812 13,090,693 22,760
Estate tax and gift tax 26,838 536 30,170 590 33,940 730 37,942 711 128,890 2,568
Excise tax 39,698 586 31,834 197 28,035 346 26,477 343 126,044 1,471
b
Other business tax 546,170 2,962 869,873 3,039 711,147 2,323 577,359 1,980 2,704,549 10,303
Subtotal 4,542,889 $21,619 4,639,582 $24,844 4,349,673 $23,014 4,247,345 $21,496 17,779,489 $90,973
Total 10,102,841 $28,393 10,050,138 $31,692 11,190,374 $30,447 11,336,278 $29,172 42,679,631 $119,704
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income. Business tax returns
include corporate income tax, various employment taxes, and other types of returns on IRS’ business
master file.
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
a
Includes abatements on Form 940, Employer's Annual Federal Unemployment Tax Return; Form
941, Employer's Quarterly Federal Tax Return; Form 942, Employer’s Quarterly Federal Return for
Household Employees (for tax periods prior to the requirement that these taxes be reported on
Schedule H of the employer’s Form 1040); and Form 943, Employer's Annual Tax Return for
Agriculture Employees.
b
Includes numerous types of returns, such as partnerships, fiduciaries, and returns used by taxpayers
to report withholdings from revenues paid to nonemployees.
Source: GAO compilation of IRS data.
Page 16 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix I
Overview of Abatements of Tax, Penalty, and Interest Assessments on Individual and
Business Returns
Table I.3: Number of Returns and
Taxpayers Receiving Abatements by Dollars in Millions Number of Amount of
Fiscal Year of Abatement–Individual and Fiscal year of abatement Returns Taxpayers Abatements abatements
Business Tax Returns Individuals
1995 3,199,052 2,738,481 5,559,952 $6,773
1996 3,097,806 2,677,106 5,410,556 6,848
1997 4,163,197 3,739,809 6,840,701 7,433
1998 4,333,950 3,881,536 7,088,933 7,676
Total–individuals 14,794,005 13,036,932 24,900,142 $28,731
Businesses
1995 2,198,715 1,535,164 4,542,889 $21,619
1996 2,235,219 1,622,569 4,639,582 24,844
1997 2,062,189 1,506,461 4,349,673 23,014
1998 1,994,723 1,454,992 4,247,345 21,496
Total–businesses 8,490,846 6,119,186 17,779,489 $90,973
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income. Business tax returns
include corporate income tax, various employment taxes, and other types of returns on IRS’ business
master file.
Amounts may not sum to totals because of rounding.
Source: GAO compilation of IRS data.
Page 17 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix II
Abatements of Tax, Penalty, and Interest
Assessments on Individual Returns
Table II.1: Number and Amount of Abatements by Fiscal Year of Abatement–Individual Tax Returns
Dollars in Millions Abatement type
Tax Penalty Interest Total
Fiscal year of abatement Number Amount Number Amount Number Amount Number Amount
1995 1,906,198 $4,392 1,955,572 $1,454 1,698,182 $927 5,559,952 $6,773
1996 1,794,074 4,699 1,898,792 1,330 1,717,690 820 5,410,556 6,848
1997 2,848,535 5,266 1,888,977 1,352 2,103,189 816 6,840,701 7,433
1998 2,548,559 5,468 2,373,303 1,452 2,167,071 756 7,088,933 7,676
Total 9,097,366 $19,824 8,116,644 $5,588 7,686,132 $3,319 24,900,142 $28,731
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
Source: GAO compilation of IRS data.
Table II.2: Number and Amount of Abatements by Income Level and Fiscal Year of Abatement–Individual Tax Returns
Dollars in Millions Fiscal year of abatement
Income level reported on 1995 1996 1997 1998 Total
original return Number Amount Number Amount Number Amount Number Amount Number Amount
Individual nonbusiness
1040A TPI<$25,000 1,481,991 $1,492 1,591,084 $1,663 1,823,081 $1,904 1,672,770 $1,849 6,568,926 $6,908
Non1040A TPI<$25,000 458,750 213 465,754 115 520,143 155 556,092 149 2,000,739 633
TPI $25,000<$50,000 980,674 450 942,286 490 1,498,650 662 1,542,657 708 4,964,267 2,311
TPI $50,000<$100,000 766,314 647 758,053 517 1,255,983 832 1,261,964 791 4,042,314 2,788
TPI $100,000 or more 640,105 1,929 575,294 2,124 594,952 2,253 678,185 2,403 2,488,536 8,710
Subtotal 4,327,834 $4,732 4,332,471 $4,911 5,692,809 $5,807 5,711,668 $5,900 20,064,782 $21,350
a
Individual business
C-TGR < $25,000 213,312 $75 196,803 $83 226,007 $46 274,196 $140 910,318 $344
C-TGR $25,000<$100,000 384,942 320 338,061 226 372,204 188 463,272 269 1,558,479 1,003
C-TGR $100,000 or more 295,709 697 262,473 687 253,573 558 316,995 612 1,128,750 2,554
F-TGR<$100,000 34,198 22 30,081 15 23,220 13 22,569 12 110,068 63
F-TGR $100,000 or more 43,220 86 37,281 103 29,780 90 27,690 70 137,971 350
Subtotal 971,381 $1,200 864,699 $1,113 904,784 $896 1,104,722 $1,104 3,845,586 $4,314
b
Income level not available 260,737 $841 213,386 $824 243,108 $730 272,543 $672 989,774 $3,067
Total 5,559,952 $6,773 5,410,556 $6,848 6,840,701 $7,433 7,088,933 $7,676 24,900,142 $28,731
Legend
1040A = Nonbusiness returns filed by individuals.
TPI = Total positive income (income reported as a positive on tax return tables)
C-TGR = Form 1040 Schedule C (profit or loss from business) total gross receipts
F-TGR = Form 1040 Schedule F (profit or loss from farming) total gross receipts
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
a
Returns with Schedules C or F may be categorized as nonbusiness rather than business if the
reported primary source of income was wages, investments, and other nonbusiness income.
b
Income level was not always available on certain penalties.
Source: GAO compilation of IRS data.
Page 18 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix II
Abatements of Tax, Penalty, and Interest Assessments on Individual Returns
Table II.3: Number of Abatements by Tax
Year and Fiscal Year of Abatement– Fiscal year of abatement
Individual Tax Returns Tax year of return 1995 1996 1997 1998 Total
a
Before 1980 7,896 4,393 2,114 1,971 16,374
1980-84 144,898 75,544 47,387 39,141 306,970
1985-89 812,576 495,186 348,975 310,899 1,967,636
1990 384,622 227,516 163,028 132,451 907,617
1991 710,487 351,250 211,233 164,267 1,437,237
1992 754,631 749,391 407,611 240,113 2,151,746
1993 1,360,075 808,455 606,640 364,265 3,139,435
1994 1,383,326 1,362,464 633,248 470,812 3,849,850
1995 1,441 1,334,059 1,432,095 828,471 3,596,066
b
1996 2,298 2,985,836 2,028,495 5,016,629
b b
1997 2,534 2,505,464 2,507,998
b b b
1998 2,584 2,584
Total 5,559,952 5,410,556 6,840,701 7,088,933 24,900,142
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
a
The earliest tax year is 1962.
b
Does not apply.
Source: GAO compilation of IRS data.
Table II.4: Amount of Abatements by Tax
Year and Fiscal Year of Abatement– Dollars in Millions Fiscal year of abatement
Individual Tax Returns Tax year of return 1995 1996 1997 1998 Total
a
Before 1980 $119 $66 $37 $27 $249
1980-84 604 349 335 197 1,486
1985-89 1,699 1,327 842 630 4,498
1990 794 471 342 255 1,863
1991 1,131 770 408 330 2,639
1992 759 1,272 845 444 3,320
1993 993 944 1,277 898 4,113
1994 672 986 796 1,044 3,499
1995 1 661 1,101 891 2,655
b
1996 1 1,449 1,356 2,805
b b
1997 1 1,604 1,605
b b b
1998 1 1
Total $6,773 $6,848 $7,433 $7,676 $28,731
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Totals are based on abatement amounts, not return amounts.
Amounts may not sum to totals because of rounding.
a
The earliest tax year is 1962.
b
Does not apply.
Source: GAO compilation of IRS data.
Page 19 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix II
Abatements of Tax, Penalty, and Interest Assessments on Individual Returns
Table II.5: Distribution of Returns With Abatements by Filing Status and Fiscal Year of Abatement–Individual Tax Returns
Filing status
Number of Married, filing Married, filing Head of Widow(er) with
Fiscal year of abatement returns Single jointly separately household dependent child Total
a a a a a a
1995 3,199,052
a a a a a a
1996 3,097,806
1997 4,163,197 25.3% 54.5% 3.8% 16.4% 0.1% 100%
1998 4,333,950 28.2 52.4 4.3 15.0 0.1 100
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Percentages may not sum to 100 because of rounding.
a
IRS was unable to reconstruct the filing status data from its historical files within the time frames of
our review.
Source: GAO compilation of IRS data.
Table II.6: Distribution of Returns With Abatements by Selected Characteristic and Fiscal Year of Abatement–Individual Tax
Returns
Selected characteristic
Fiscal year of Number of Primary taxpayer Substitute for Paid preparer on Earned income credit on
abatement returns over age 65 return prepared original return original return
1995 3,199,052 10.9% 7.5% 57.5% 4.1%
1996 3,097,806 10.8 8.7 55.8 4.6
1997 4,163,197 8.6 5.9 51.1 4.4
1998 4,333,950 8.9 4.4 53.9 5.2
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Percentages should not be totaled because abatements could occur on returns with more than one
selected characteristic.
Source: GAO compilation of IRS data.
Page 20 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix II
Abatements of Tax, Penalty, and Interest Assessments on Individual Returns
Table II.7: Distribution of Abatements on Returns Associated With Selected IRS Activity by Fiscal Year of Abatement–Individual
Tax Returns
a
Selected IRS activity
Fiscal year of Number of Audit Substitute Additional tax d Offer-in- Criminal
b c e f g h
abatement abatements indicator for return assessments compromise Collection Litigation investigation
1995 5,559,952 9.7% 13.6% 25.8% 1.7% 76.7% 5.4% 0.2%
1996 5,410,556 10.8 15.6 27.8 0.8 78.4 3.3 0.1
1997 6,840,701 8.7 10.8 20.6 0.2 75.0 1.8 0.1
1998 7,088,933 9.6 7.6 18.6 0.1 78.3 2.2 0.1
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Percentages should not be totaled because abatements could occur on returns with more than one
selected IRS activity.
a
IRS activity that occurred before the abatement.
b
Includes audits that are still open and audits closed with a change in tax assessments or no change
in tax assessments.
c
Return prepared by IRS based on third party information of income paid to a nonfiler.
d
IRS makes additional tax assessments after the original tax assessment because of an IRS
enforcement action, such as an audit, or a taxpayer action, such as filing amended returns.
e
IRS and taxpayer had reached an agreement on the portion of unpaid assessments the taxpayer
would pay.
f
Return was in collection stream (notices, installment agreements, delinquent accounts). Abatements
on full paid returns result in refunds to taxpayers and would not be in collection status.
g
Return was in some phase of the litigation process--open or closed. Would include bankruptcy cases,
and cases settled or closed before trial.
h
IRS investigation of criminal wrongdoing associated with the return. Includes cases open and closed,
including those without further action by IRS.
Source: GAO compilation of IRS data.
Page 21 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix II
Abatements of Tax, Penalty, and Interest Assessments on Individual Returns
Table II.8: Distribution of Amount of Abatements on Returns Associated With Selected IRS Activity by Fiscal Year of
Abatement–Individual Tax Returns
a
Dollars in Millions Selected IRS activity
Fiscal year of Amount of Audit Substitute Additional tax d Offer-in- Criminal
b c e f g h
abatement abatements indicator for return assessments compromise Collection Litigation investigation
1995 $6,773 30.9% 14.8% 37.6% 5.1% 74.4% 14.4% 2.7%
1996 $6,848 35.1 17.8 40.6 2.2 74.1 9.8 3.0
1997 $7,433 31.3 16.9 35.7 0.7 71.3 7.1 1.8
1998 $7,676 32.1 15.0 31.6 0.4 70.6 5.8 1.0
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Percentages should not be totaled because abatements could occur on returns with more than one
selected IRS activity.
a
IRS activity that occurred before the abatement.
b
Includes audits that are still open and audits closed with a change in tax assessments or no change
in tax assessments.
c
Return prepared by IRS based on third party information of income paid to a nonfiler.
d
IRS makes additional tax assessments after the original tax assessment because of an IRS
enforcement action, such as an audit, or a taxpayer action, such as filing amended returns.
e
IRS and taxpayer had reached an agreement on the portion of unpaid assessments the taxpayer
would pay.
f
Return was in collection stream (notices, installment agreements, delinquent accounts). Abatements
on full paid returns result in refunds to taxpayers and would not be in collection status.
g
Return was in some phase of the litigation process- open or closed. Would include bankruptcy cases,
and cases settled or closed before trial.
h
IRS investigation of criminal wrongdoing associated with the return. Includes cases open and closed,
including those without further action by IRS.
Source: GAO compilation of IRS data.
Page 22 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix III
Abatements of Tax, Penalty, and Interest
Assessments on Business Returns
Tables in this appendix show information on the number and amount of
tax, penalty, and interest abatements for business tax returns. Tables on
corporate income tax, employment tax, and other business tax returns,
generally, are subsets of the table titled business tax returns.
Table III.1: Number and Amount of Abatements by Fiscal Year of Abatement–Business Tax Returns
Dollars in Millions Abatement type
Tax Penalty Interest Total
Fiscal year of abatement Number Amount Number Amount Number Amount Number Amount
1995 735,073 $16,428 2,431,266 $3,471 1,376,550 $1,720 4,542,889 $21,619
1996 648,927 17,790 2,491,624 4,680 1,499,031 2,375 4,639,582 24,844
1997 582,823 16,853 2,362,892 4,188 1,403,958 1,972 4,349,673 23,014
1998 550,113 16,772 2,332,178 3,343 1,365,054 1,381 4,247,345 21,496
Total 2,516,936 $67,843 9,617,960 $15,682 5,644,593 $7,448 17,779,489 $90,973
Notes: Business tax returns include corporate income tax, various employment taxes, and other types
of returns on IRS’ business master file.
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
Source: GAO compilation of IRS data.
Table III.2: Number and Amount of Abatements by Fiscal Year of Abatement–Corporate Income Tax Returns
Dollars in Millions Abatement type
Tax Penalty Interest Total
Fiscal year of abatement Number Amount Number Amount Number Amount Number Amount
1995 176,869 $11,131 136,643 $379 117,415 $1,243 430,927 $12,753
1996 174,559 12,560 140,810 881 120,185 1,883 435,554 15,325
1997 175,228 11,501 137,183 342 118,260 1,299 430,671 13,142
1998 171,244 11,260 138,160 477 122,757 912 432,161 12,649
Total 697,900 $46,452 552,796 $2,079 478,617 $5,338 1,729,313 $53,870
Notes: Corporate returns include all Form 1120, Federal Corporate Income Tax returns.
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
Source: GAO compilation of IRS data
Page 23 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix III
Abatements of Tax, Penalty, and Interest Assessments on Business Returns
Table III.3: Number and Amount of Abatements by Fiscal Year of Abatement–Employment Tax Returns
Dollars in Millions Abatement type
Tax Penalty Interest Total
Fiscal year of abatement Number Amount Number Amount Number Amount Number Amount
1995 504,336 $2,794 1,910,252 $1,770 1,084,668 $219 3,499,256 $4,783
1996 389,604 3,014 1,822,060 2,381 1,060,487 298 3,272,151 5,693
1997 352,694 3,772 1,759,338 2,264 1,033,848 436 3,145,880 6,472
1998 326,281 4,082 1,786,956 1,491 1,060,169 239 3,173,406 5,812
Total 1,572,915 $13,662 7,278,606 $7,907 4,239,172 $1,192 13,090,693 $22,760
Notes: Includes abatements on Form 940, Employer's Annual Federal Unemployment Tax Return;
Form 941, Employer's Quarterly Federal Tax Return; Form 942, Employer’s Quarterly Federal Return
for Household Employees (for tax periods prior to the requirement that these taxes be reported on
Schedule H of the employer’s Form 1040); and Form 943, Employer's Annual Tax Return for
Agriculture Employees.
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
Source: GAO compilation of IRS data.
Table III.4: Number and Amount of Abatements by Fiscal Year of Abatement–Other Business Tax Returns
Dollars in Millions Abatement type
Tax Penalty Interest Total
Fiscal year of abatement Number Amount Number Amount Number Amount Number Amount
1995 53,868 $2,504 384,371 $1,322 174,467 $258 612,706 $4,083
1996 84,764 2,216 528,754 1,417 318,359 193 931,877 3,826
1997 54,901 1,580 466,371 1,582 251,850 237 773,122 3,399
1998 52,588 1,430 407,062 1,374 182,128 230 641,778 3,035
Total 246,121 $7,729 1,786,558 $5,695 926,804 $918 2,959,483 $14,343
Notes: Includes numerous types of tax returns, such as estate, gift, partnerships, fiduciaries, and
returns used by taxpayers to report withholdings from revenues paid to nonemployees.
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
Source: GAO compilation of IRS data.
Page 24 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix III
Abatements of Tax, Penalty, and Interest Assessments on Business Returns
Table III.5: Number and Amount of Abatements by Asset Size and Fiscal Year of Abatement–Corporate Income Tax Returns
Dollars in Millions Fiscal year of abatement
1995 1996 1997 1998 Total
Asset size reported on
balance sheet Number Amount Number Amount Number Amount Number Amount Number Amount
Small corporation
a
No balance sheet 13,318 $1,061 14,394 $543 16,179 $392 16,175 $710 60,066 $2,706
Assets < $250,000 199,034 155 209,144 196 209,476 214 209,255 218 826,909 782
$250,000 < $1 million 100,653 234 104,849 286 102,841 306 104,050 320 412,393 1,145
$1 million < $5 million 56,867 384 57,639 458 55,639 549 56,289 563 226,434 1,955
$5 million < $10 million 14,551 216 11,126 240 10,479 266 10,878 315 47,034 1,036
Subtotal 384,423 $2,050 397,152 $1,722 394,614 $1,726 396,647 $2,127 1,572,836 $7,625
Large corporation
$10 million < $50 million 12,446 $785 12,959 $794 12,705 $895 12,605 $937 50,715 $3,412
$50 million < $100 million 3,333 533 3,498 489 3,322 480 3,193 611 13,346 2,113
$100 million < $250 million 3,427 773 3,476 841 3,231 971 3,366 883 13,500 3,468
$250 million or more 5,765 7,971 6,098 11,121 5,912 8,557 5,968 7,963 23,743 35,612
Subtotal 24,971 $10,061 26,031 $13,246 25,170 $10,903 25,132 $10,393 101,304 $44,604
b
Asset size not available 21,533 $641 12,371 $357 10,887 $513 10,382 $129 55,173 $1,640
Total 430,927 $12,753 435,554 $15,325 430,671 $13,142 432,161 $12,649 1,729,313 $53,870
Notes: Corporate returns include all Form 1120, Federal Corporate Income Tax returns.
We could not provide the asset size for businesses on noncorporate business returns because the
information is only available for corporate income tax returns.
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
a
Taxpayer did not provide, or it was missing.
b
Asset size was not available on returns transferred from IRS’ historical files or non-master file and on
special types of assessments.
Source: GAO compilation of IRS data.
Page 25 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix III
Abatements of Tax, Penalty, and Interest Assessments on Business Returns
Table III.6: Number of Abatements by Tax Year and Fiscal Year of Abatement–Business Tax Returns
Fiscal year of abatement
Tax year of return 1995 1996 1997 1998 Total
a
Before 1980 20,715 21,996 24,308 26,024 93,043
1980-84 11,823 6,873 4,678 2,515 25,889
1985-89 119,722 72,276 51,808 35,396 279,202
1990 84,901 38,029 22,156 14,219 159,305
1991 345,527 90,237 39,297 21,689 496,750
1992 335,753 288,718 77,206 33,325 735,002
1993 591,763 365,124 268,941 73,296 1,299,124
1994 2,630,280 690,742 306,757 187,091 3,814,870
1995 402,405 2,603,722 652,783 294,065 3,952,975
b
1996 461,865 2,440,383 677,947 3,580,195
b b
1997 461,356 2,331,806 2,793,162
b b b
1998 549,972 549,972
Total 4,542,889 4,639,582 4,349,673 4,247,345 17,779,489
Notes: Business tax returns include corporate income tax, various employment taxes, and other types
of returns on IRS’ business master file.
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
a
Earliest tax year is 1961.
b
Does not apply.
Source: GAO compilation of IRS data.
Table III.7: Amount of Abatements by Tax Year and Fiscal Year of Abatement–Business Tax Returns
Dollars in Millions Fiscal year of abatement
Tax year of return 1995 1996 1997 1998 Total
a
Before 1980 $1,098 $776 $1,099 $653 $3,626
1980-84 1,975 1,450 1,578 736 5,740
1985-89 3,024 3,202 3,179 2,115 11,520
1990 2,574 2,426 1,151 436 6,588
1991 3,673 2,157 472 611 6,914
1992 2,146 3,957 1,147 564 7,814
1993 2,889 2,437 3,592 1,324 10,241
1994 3,202 2,371 2,437 3,372 11,381
1995 1,039 5,340 3,352 3,038 12,769
b
1996 728 4,647 3,751 9,126
b b
1997 360 4,024 4,384
b b b
1998 871 871
Total $21,619 $24,844 $23,014 $21,496 $90,973
Notes: Business tax returns include corporate income tax, various employment taxes, and other types
of returns on IRS’ business master file.
Totals are based on abatement amounts, not return amounts.
Amounts may not sum to totals because of rounding.
a
Earliest tax year is 1961.
b
Does not apply.
Source: GAO compilation of IRS data.
Page 26 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix III
Abatements of Tax, Penalty, and Interest Assessments on Business Returns
Table III.8: Distribution of Abatements on Returns With Selected IRS Activity by Fiscal Year of Abatement–Business Tax
Returns
a
Selected IRS activity
Fiscal year of Number of Audit Additional tax Offer-in- Criminal
b c d e f g h
abatement abatements indicator 6020b assessments compromise Collection Litigation investigation
i
1995 4,542,889 3.4% 3.7% 9.8% 0.1% 78.6% 1.3%
i
1996 4,639,582 3.6 2.6 8.9 0.1 80.2 1.1
f i
1997 4,349,673 3.7 3.1 8.0 81.4 1.0
f i
1998 4,247,345 3.7 3.6 5.9 81.6 1.1
Notes: Business tax returns include corporate income tax, various employment taxes, and other types
of returns on IRS’ business master file.
Percentages should not be totaled because the abatement could have been preceded by more than
one selected IRS activity.
a
IRS activity that occurred before the abatement.
b
Includes audits that are still open and audits closed with a change in tax assessments or no change
in tax assessments.
c
6020b, a substitute for return prepared by IRS for nonfilers of employment tax returns.
d
IRS makes additional tax assessments after the original tax assessment because of an IRS
enforcement action, such as an audit, or a taxpayer action, such as filing amended returns.
e
IRS and taxpayer had reached an agreement on the portion of unpaid assessments the taxpayer
would pay.
f
Return was in collection stream (notices, installment agreements, delinquent accounts). Abatements
on full paid returns result in a refunds to taxpayers and would not be in collection status.
g
Return was in some phase of the litigation process--open or closed. Would include bankruptcy cases,
and cases settled or closed before trial.
h
IRS investigation of criminal wrongdoing associated with the return. Includes cases open and closed,
including those without further action by IRS.
i
Less than one-tenth of 1 percent.
Source: GAO compilation of IRS data.
Page 27 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix III
Abatements of Tax, Penalty, and Interest Assessments on Business Returns
Table III.9: Distribution of Amounts of Abatements on Returns With Selected IRS Activity by Fiscal Year of Abatement–
Business Tax Returns
a
Dollars in Millions Selected IRS activity
Fiscal year of Amount of Audit Additional tax Offer-in- Criminal
b c d e f g h
abatement abatements indicator 6020b assessments compromise Collection Litigation investigation
1995 $21,619 60.7% 1.0% 35.9% 0.1% 47.1% 6.3% 0.4%
f
1996 $24,844 62.3 0.8 30.7 54.2 11.6 0.1
f
1997 $23,014 57.4 1.1 35.8 48.7 8.5 0.3
f
1998 $21,496 59.7 1.4 25.1 37.9 5.7 0.2
Notes: Business tax returns include corporate income tax, various employment taxes, and other types
of returns on IRS’ business master file.
Percentages should not be totaled because the abatement could have been preceded by more than
one selected IRS activity.
a
IRS activity that occurred before the abatement.
b
Includes audits that are still open and audits closed with a change in tax assessments or no change
in tax assessments.
c
6020b, a substitute for return prepared by IRS for nonfilers of employment tax returns.
d
IRS makes additional tax assessments after the original tax assessment because of an IRS
enforcement action, such as an audit, or a taxpayer action, such as filing amended returns.
e
IRS and taxpayer had reached an agreement on the portion of unpaid assessments the taxpayer
would pay.
f
Return was in collection stream (notices, installment agreements, delinquent accounts). Abatements
on full paid returns result in a refunds to taxpayers and would not be in collection status.
g
Return was in some phase of the litigation process--open or closed. Would include bankruptcy cases,
and cases settled or closed before trial.
h
IRS investigation of criminal wrongdoing associated with the return. Includes cases open and closed,
including those without further action by IRS.
Source: GAO compilation of IRS data.
Page 28 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest
Assessments on Individual and Business Tax
Returns
Table IV.1: Number and Percent of Penalty and Interest Abatements by Fiscal Year of Abatement—Individual and Business Tax
Returns
Fiscal year of abatement
1995 1996 1997 1998 Average
Penalty (IRC section) Number Percent Number Percent Number Percent Number Percent Number Percent
Failure to file (6651(a)(1)) 825,233 18.8 822,298 18.7 835,604 19.7 821,156 17.5 826,073 18.6
Estimated tax (6654 and 6655) 278,063 6.3 261,128 5.9 244,436 5.7 244,042 5.2 256,917 5.8
Failure to make tax deposit (6656) 866,594 19.8 809,347 18.4 773,695 18.2 740,374 15.7 797,503 18.0
Failure to furnish taxpayer
a a a a a
identification number (6723) 504 432 237 101 319
b
Daily delinquency (6652(c)(2)(A)) 39,644 0.9 39,829 0.9 38,905 0.9 58,106 1.2 44,121 1.0
Miscellaneous civil-trust fund
c
(6672) 229,630 5.2 187,250 4.3 222,502 5.2 255,453 5.4 223,709 5.0
Miscellaneous civil-other (6721(e)
d
and others) 86,833 2.0 81,081 1.8 61,747 1.5 71,880 1.5 75,385 1.7
Incomplete partnership return
a
(6698) 4,661 0.1 3,321 0.1 3,077 0.1 2,339 3,350 0.1
Failure to pay (6651(a) (2)-(3)) 1,991,945 45.4 2,138,238 48.7 2,034,711 47.9 2,475,955 52.6 2,160,212 48.7
Bad check (6657) 13,170 0.3 13,331 0.3 13,766 0.3 20,024 0.4 15,073 0.3
a
Tip income (6652(b)) 2,569 0.1 3,113 0.1 2,562 0.1 1,729 2,493 0.1
a a a a a
Fraud (6663) 1,593 1,166 1,012 837 1,152
e
Negligence (6662(c)) 46,399 1.1 29,882 0.7 19,615 0.5 13,485 0.3 27,345 0.6
Total penalty abatements 4,386,838 100.0 4,390,416 100.0 4,251,869 100.0 4,705,481 100.0 4,433,651 100.0
Interest abatements 3,074,732 100.0 3,216,721 100.0 3,507,147 100.0 3,532,125 100.0 3,332,681 100.0
Total 7,461,570 100.0 7,607,137 100.0 7,759,016 100.0 8,237,606 100.0 7,766,332 100.0
Note: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income. Business tax returns
include corporate income tax, various employment taxes, and other types of returns on IRS’ business
master file.
a
Less than one-tenth of 1 percent.
b
Fee accumulated by certain trusts and exempt organizations for failure to file in a timely manner.
c
Trust fund penalties are assessed against responsible individuals of a business when they fail to pay
IRS the taxes they withheld from employees’ earnings.
d
Abatements of penalties for intentional disregard of the information return filing requirements (section
6721(e)) accounted for 54 percent of all other miscellaneous civil penalty abatements over the 4
years. The remaining 46 percent of abatements were spread among numerous types of other
miscellaneous civil penalties.
e
Negligence includes any failure to make a reasonable attempt to comply with the provisions of the
Code.
Source: GAO compilation of IRS data.
Page 29 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.2: Amount and Percent of Penalty and Interest Abatements by Fiscal Year of Abatement—Individual and Business Tax
Returns
Dollars in Millions Fiscal year of abatement
1995 1996 1997 1998 Average
Penalty (IRC section) Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
Failure to file (6651(a)(1)) $928 18.8 $1,278 21.3 $1,339 24.2 $1,363 28.4 $1,227 23.1
Estimated tax (6654 and 6655) 182 3.7 208 3.5 188 3.4 282 5.9 215 4.0
Failure to make tax deposit (6656) 1,831 37.2 2,493 41.5 2,182 39.4 1,343 28.0 1,962 36.9
Failure to furnish taxpayer identification
a b a b a b a b a b
number (6723)
c
Daily delinquency (6652(c)(2)(A)) 55 1.1 58 1.0 55 1.0 110 2.3 70 1.3
d
Miscellaneous civil-trust fund (6672) 722 14.7 635 10.6 668 12.1 621 13.0 662 12.4
Miscellaneous civil-other (6721(e) and
e
others) 631 12.8 607 10.1 590 10.7 596 12.4 606 11.4
Incomplete partnership return (6698) 125 2.5 67 1.1 22 0.4 7 0.2 55 1.0
Failure to pay (6651(a) (2)-(3)) 322 6.5 576 9.6 389 7.0 380 7.9 417 7.8
b b
Bad check (6657) 2 2 4 0.1 10 0.2 5 0.1
b b b b b
Tip income (6652(b)) 1 1 1 1 1
Fraud (6663) 37 0.7 27 0.5 40 0.7 27 0.6 33 0.6
f
Negligence (6662(c)) 89 1.8 57 0.9 62 1.1 56 1.2 66 1.2
Total penalty abatements $4,925 100.0 $6,009 100.0 $5,540 100.0 $4,795 100.0 $5,317 100.0
Interest abatements $2,647 100.0 $3,195 100.0 $2,788 100.0 $2,137 100.0 $2,692 100.0
Total $7,572 100.0 $9,204 100.0 $8,328 100.0 $6,932 100.0 $8,009 100.0
Note: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income. Business tax returns
include corporate income tax, various employment taxes, and other types of returns on IRS’ business
master file.
a
Less than $1 million.
b
Less than one-tenth of 1 percent.
c
Fee accumulated by certain trusts and exempt organizations for failure to file in a timely manner.
d
Trust fund penalties are assessed against responsible individuals of a business when they fail to pay
IRS the taxes they withheld from employees’ earnings.
e
Abatements of penalties for intentional disregard of the information return filing requirements (section
6721(e)) accounted for 78 percent of all other miscellaneous civil penalty abatement amounts over
the 4 years. The remaining 22 percent of abatement amounts were spread among numerous types of
other miscellaneous civil penalties.
f
Negligence includes any failure to make a reasonable attempt to comply with the provisions of the
Code.
Source: GAO compilation of IRS data.
Page 30 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.3: Percent of Penalty and Interest Abatements Computed Manually and by Computer by Fiscal Year of Abatement—
Individual and Business Tax Returns
Fiscal year of abatement
1995 1996 1997 1998
Penalty (IRC section) Manual Computer Manual Computer Manual Computer Manual Computer
Failure to file (6651(a)(1)) 55.3 44.7 53.3 46.7 51.5 48.5 48.8 51.2
Estimated tax (6654 and 6655) 87.1 12.9 84.8 15.2 83.2 16.8 82.0 18.0
Failure to make tax deposit (6656) 57.7 42.3 55.1 44.9 50.8 49.2 49.4 50.6
Failure to furnish taxpayer identification number (6723) 100.0 0 100.0 0 100.0 0 100.0 0
a
Daily delinquency (6652(c)(2)(A)) 100.0 0 100.0 0 100.0 0 100.0 0
b
Miscellaneous civil-trust fund (6672) 100.0 0 100.0 0 100.0 0 100.0 0
c
Miscellaneous civil-other (6721(e) and others) 100.0 0 100.0 0 100.0 0 100.0 0
Incomplete partnership return (6698) 0 100.0 0 100.0 0 100.0 0 100.0
Failure to pay (6651(a) (2)-(3)) 15.4 84.6 12.4 87.6 12.1 87.9 13.9 86.1
Bad check (6657) 99.3 0.7 99.3 0.7 99.1 0.9 99.5 0.5
Tip income (6652(b)) 100.0 0 100.0 0 100.0 0 100.0 0
Fraud (6663) 100.0 0 100.0 0 100.0 0 100.0 0
d
Negligence (6662(c)) 100.0 0 100.0 0 100.0 0 100.0 0
Percent of total penalty abatements 43.9 56.1 39.3 60.7 38.4 61.6 36.8 63.2
Percent of interest abatements 4.9 95.1 2.7 97.3 1.3 98.7 4.2 95.8
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income. Business tax returns
include corporate income tax, various employment taxes, and other types of returns on IRS’ business
master file.
IRS employees manually make decisions on abatements when taxpayers establish that penalty
assessments are in error or they had reasonable cause for being delinquent. IRS computers
automatically abate all or portions of penalty and interest assessments when IRS reduces associated
tax or other penalty assessments or applies timely payments to taxpayers' accounts.
a
Fee accumulated by certain trusts and exempt organizations for failure to file in a timely manner.
b
Trust fund penalties are assessed against responsible individuals of a business when they fail to pay
IRS the taxes they withheld from employees’ earnings.
c
Abatements of penalties for intentional disregard of the information return filing requirements (section
6721(e)) accounted for 54 percent of all other miscellaneous civil penalty abatements over the 4
years. The remaining 46 percent of abatements were spread among numerous types of other
miscellaneous civil penalties.
d
Negligence includes any failure to make a reasonable attempt to comply with the provisions of the
Code.
Source: GAO compilation of IRS data.
Page 31 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.4: Percent of Amount of Penalty and Interest Abatements Computed Manually and by Computer by Fiscal Year of
Abatement—Individual and Business Tax Returns
Fiscal year of abatement
1995 1996 1997 1998
Penalty (IRC section) Manual Computer Manual Computer Manual Computer Manual Computer
Failure to file (6651(a)(1)) 63.6 36.4 60.7 39.3 69.2 30.8 69.3 30.7
Estimated tax (6654 and 6655) 94.6 5.4 93.1 6.9 92.2 7.8 93.9 6.1
Failure to make tax deposit (6656) 83.7 16.3 84.9 15.1 77.7 22.3 72.0 28.0
Failure to furnish taxpayer identification number (6723) 100.0 0 100.0 0 100.0 0 100.0 0
a
Daily delinquency (6652(c)(2)(A)) 100.0 0 100.0 0 100.0 0 100.0 0
b
Miscellaneous civil-trust fund (6672) 100.0 0 100.0 0 100.0 0 100.0 0
c
Miscellaneous civil-other (6721(e) and others) 100.0 0 100.0 0 100.0 0 100.0 0
Incomplete partnership return (6698) 0 100.0 0 100.0 0 100.0 0 100.0
Failure to pay (6651(a) (2)-(3)) 39.2 60.8 56.0 44.0 40.7 59.3 39.8 60.2
Bad check (6657) 92.9 7.1 99.7 0.3 99.8 0.2 99.9 0.1
Tip income (6652(b)) 100.0 0 100.0 0 100.0 0 100.0 0
Fraud (6663) 100.0 0 100.0 0 100.0 0 100.0 0
d
Negligence (6662(c)) 100.0 0 100.0 0 100.0 0 100.0 0
Percent of total penalty abatement amounts 80.4 19.6 79.8 20.2 78.9 21.1 78.1 21.9
Percent of interest abatements 54.6 45.4 50.8 49.2 51.2 48.8 43.1 56.9
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income. Business tax returns
include corporate income tax, various employment taxes, and other types of returns on IRS’ business
master file.
IRS employees manually make decisions on abatements when taxpayers establish that penalty
assessments are in error or they had reasonable cause for being delinquent. IRS computers
automatically abate all or portions of penalty and interest assessments when IRS reduces associated
tax or other penalty assessments or applies timely payments to taxpayers' accounts.
a
Fee accumulated by certain trusts and exempt organizations for failure to file in a timely manner.
.b
Trust fund penalties are assessed against responsible individuals of a business when they fail to pay
IRS the taxes they withheld from employees’ earnings.
c
Abatements of penalties for intentional disregard of the information return filing requirements (section
6721(e)) accounted for 78 percent of all other miscellaneous civil penalty abatement amounts over
the 4 years. The remaining 22 percent of abatement amounts were spread among numerous types of
other miscellaneous civil penalties.
d
Negligence includes any failure to make a reasonable attempt to comply with the provisions of the
Code.
Source: GAO compilation of IRS data.
Page 32 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Tables IV.5-IV.27 show abatements of penalty and/or interest on individual
tax returns, including returns with Schedule C, business income, and
Schedule F, farm income.
Table IV.5: Number and Percent of Penalty and Interest Abatements by Fiscal Year of Abatement—Individual Tax Returns
Fiscal year of abatement
1995 1996 1997 1998 Average
Penalty (IRC section) Number Percent Number Percent Number Percent Number Percent Number Percent
Failure to file (6651(a)(1)) 436,914 22.3 446,479 23.5 443,776 23.5 445,699 18.8 443,217 21.8
Estimated tax (6654 and 6655) 251,326 12.9 232,023 12.2 212,444 11.2 207,312 8.7 225,776 11.1
a a a a a a a a a a
Failure to make tax deposit (6656)
Failure to furnish taxpayer
a a a a a
identification number (6723) 504 432 237 101 319
b a a a a a a a a a a
Daily delinquency (6652(c)(2)(A))
Miscellaneous civil-trust fund
c
(6672) 229,630 11.7 187,250 9.9 222,502 11.8 255,453 10.8 223,709 11.0
Miscellaneous civil-other (6662(d)-
d
(h)) and others) 23,015 1.2 18,666 1.0 18,273 1.0 23,853 1.0 20,952 1.0
Incomplete partnership return
a a a a a a a a a a
(6698)
Failure to pay (6651(a) (2)-(3)) 953,200 48.7 969,139 51.0 958,255 50.7 1,413,773 59.6 1,073,592 52.9
Bad check (6657) 11,133 0.6 11,354 0.6 10,887 0.6 11,359 0.5 11,183 0.6
Tip income (6652(b)) 2,569 0.1 3,113 0.2 2,562 0.1 1,729 0.1 2,493 0.1
a a a a
Fraud (6663) 1,367 0.1 907 795 749 955
e
Negligence (6662(c)) 45,914 2.3 29,429 1.5 19,246 1.0 13,275 0.6 26,966 1.3
Total penalty abatements 1,955,572 100.0 1,898,792 100.0 1,888,977 100.0 2,373,303 100.0 2,029,161 100.0
Interest abatements 1,698,182 100.0 1,717,690 100.0 2,103,189 100.0 2,167,071 100.0 1,921,533 100.0
Total 3,653,754 100.0 3,616,482 100.0 3,992,166 100.0 4,540,374 100.0 3,950,694 100.0
Note: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
a
Does not apply.
b
Fee accumulated by certain trusts and exempt organizations for failure to file in a timely manner.
c
Trust fund penalties are assessed against responsible individuals of a business when they fail to pay
IRS the taxes they withheld from employees’ earnings.
d
From fiscal year 1995 through 1998, abatements of accuracy penalties (section 6662(d)–(h))
accounted for an average of 89 percent of other miscellaneous civil penalty abatements. The
remaining abatements, averaging 11 percent, were spread over numerous types of other
miscellaneous civil penalties.
e
Negligence includes any failure to make a reasonable attempt to comply with the provisions of the
Code.
Source: GAO compilation of IRS data.
Page 33 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.6: Amount and Percent of Penalty and Interest Abatements by Fiscal Year of Abatement—Individual Tax Returns
Dollars in Millions Fiscal year of abatement
1995 1996 1997 1998 Average
Penalty (IRC section) Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
Failure to file (6651(a)(1)) $322 22.2 $365 27.5 $362 26.8 $507 34.9 $389 27.9
Estimated tax (6654 and 6655) 106 7.3 86 6.5 84 6.2 97 6.7 93 6.7
a a a a a a a a a a
Failure to make tax deposit (6656)
Failure to furnish taxpayer identification
b c b c b c b c b c
number (6723)
d a a a a a a a a a a
Daily delinquency (6652(c)(2)(A))
e
Miscellaneous civil-trust fund (6672) 722 49.6 635 47.8 668 49.4 621 42.8 662 47.4
Miscellaneous civil-other (6662(d)-(h) and
f
others) 66 4.5 54 4.1 46 3.4 55 3.8 55 4.0
a a a a a a a a a a
Incomplete partnership return (6698)
Failure to pay (6651(a) (2)-(3)) 117 8.0 108 8.2 103 7.6 115 7.9 111 7.9
Bad check (6657) 1 0.1 2 0.1 2 0.1 3 0.2 2 0.1
c c
Tip income (6652(b)) 1 1 0.1 1 0.1 1 1 0.1
Fraud (6663) 32 2.2 24 1.8 37 2.8 25 1.8 30 2.1
g
Negligence (6662(c)) 87 6.0 54 4.1 49 3.6 27 1.9 55 3.9
Total penalty abatements $1,454 100.0 $1,329 100.0 $1,353 100.0 $1,452 100.0 $1,397 100.0
Interest abatements $927 100.0 $820 100.0 $816 100.0 $756 100.0 $830 100.0
Total $2,382 100.0 $2,150 100.0 $2,168 100.0 $2,208 100.0 $2,227 100.0
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Amounts may not sum to totals because of rounding.
a
Does not apply.
b
Less than $1 million.
c
Less than one-tenth of 1 percent.
d
Fee accumulated by certain trusts and exempt organizations for failure to file in a timely manner.
e
Trust fund penalties are assessed against responsible individuals of a business when they fail to pay
IRS the taxes they withheld from employees’ earnings.
f
From fiscal year 1995 through 1998, abatements of accuracy penalties (section 6662(d)–(h))
accounted for an average of 78 percent of abatement amounts for other miscellaneous civil penalty
abatements. The remaining abatement amounts, averaging 22 percent, were spread over numerous
types of other miscellaneous civil penalties.
e
Negligence includes any failure to make a reasonable attempt to comply with the provisions of the
Code.
Source: GAO compilation of IRS data.
Page 34 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.7: Percent of Penalty and Interest Abatements Computed Manually and by Computer by Fiscal Year of Abatement—
Individual Tax Returns
Fiscal year of abatement
1995 1996 1997 1998
Penalty (IRC section) Manual Computer Manual Computer Manual Computer Manual Computer
Failure to file (6651(a)(1)) 62.1 37.9 58.9 41.1 51.7 48.3 47.7 52.3
Estimated tax (6654 and 6655) 88.1 11.9 85.0 15.0 83.2 16.8 81.3 18.7
a a a a a a a a
Failure to make tax deposit (6656)
Failure to furnish taxpayer identification number (6723) 100.0 0 100.0 0 100.0 0 100.0 0
b a a a a a a a a
Daily delinquency (6652(c)(2)(A))
c
Miscellaneous civil-trust fund (6672) 100.0 0 100.0 0 100.0 0 100.0 0
d
Miscellaneous civil-other (6662(d)-(h) and others) 100.0 0 100.0 0 100.0 0 100.0 0
a a a a a a a a
Incomplete partnership return (6698)
Failure to pay (6651(a) (2)-(3)) 19.3 80.7 15.8 84.2 14.4 85.6 16.1 83.9
Bad check (6657) 100.0 0 100.0 0 100.0 0 100.0 0
Tip income (6652(b)) 100.0 0 100.0 0 100.0 0 100.0 0
Fraud (6663) 100.0 0 100.0 0 100.0 0 100.0 0
e
Negligence (6662(c)) 100.0 0 100.0 0 100.0 0 100.0 0
Percent of total penalty abatements 50.6 49.4 45.5 54.5 43.3 56.7 38.6 61.4
Percent of interest abatements 7.4 92.6 3.9 96.1 1.4 98.6 6.0 94.0
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
IRS employees manually make decisions on abatements when taxpayers establish that penalty
assessments are in error or they had reasonable cause for being delinquent. IRS computers
automatically abate all or portions of penalty and interest assessments when IRS reduces associated
tax or other penalty assessments or applies timely payments to taxpayers' accounts.
a
Does not apply.
b
Fee accumulated by certain trusts and exempt organizations for failure to file in a timely manner.
c
Trust fund penalties are assessed against responsible individuals of a business when they fail to pay
IRS the taxes they withheld from employees’ earnings.
d
From fiscal year 1995 through 1998, abatements of accuracy penalties (section 6662(d)–(h))
accounted for an average of 89 percent of other miscellaneous civil penalty abatements. The
remaining abatements, averaging 11 percent, were spread over numerous types of other
miscellaneous civil penalties.
e
Negligence includes any failure to make a reasonable attempt to comply with the provisions of the
Code.
Source: GAO compilation of IRS data.
Page 35 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.8: Percent of Amount of Penalty and Interest Abatements Computed Manually and by Computer by Fiscal Year of
Abatement—Individual Tax Returns
Fiscal year of abatement
1995 1996 1997 1998
Penalty (IRC section) Manual Computer Manual Computer Manual Computer Manual Computer
Failure to file (6651(a)(1)) 73.4 26.6 72.0 28.0 68.0 32.0 76.7 23.3
Estimated tax (6654 and 6655) 92.1 7.9 86.5 13.5 85.6 14.4 86.1 13.9
a a a a a a a a
Failure to make tax deposit (6656)
Failure to furnish taxpayer identification number (6723) 100.0 0 100.0 0 100.0 0 100.0 0
b
Daily delinquency (6652(c)(2)(A)) 0 0 0 0 0 0 0 0
c
Miscellaneous civil-trust fund (6672) 100.0 0 100.0 0 100.0 0 100.0 0
d
Miscellaneous civil-other (6662(d)-(h) and others) 100.0 0 100.0 0 100.0 0 100.0 0
a a a a a a a a
Incomplete partnership return (6698)
Failure to pay (6651(a) (2)-(3)) 53.6 46.4 49.6 50.4 46.1 53.9 48.5 51.5
Bad check (6657) 100.0 0 100.0 0 100.0 0 100.0 0
Tip income (6652(b)) 100.0 0 100.0 0 100.0 0 100.0 0
Fraud (6663) 100.0 0 100.0 0 100.0 0 100.0 0
e
Negligence (6662(c)) 100.0 0 100.0 0 100.0 0 100.0 0
Percent of total penalty abatement amounts 89.8 10.2 87.3 12.7 86.4 13.6 86.9 13.1
Percent of interest abatements 49.6 50.4 36.7 63.3 27.5 72.5 18.0 82.0
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
IRS employees manually make decisions on abatements when taxpayers establish that penalty
assessments are in error or they had reasonable cause for being delinquent. IRS computers
automatically abate all or portions of penalty and interest assessments when IRS reduces associated
tax or other penalty assessments or applies timely payments to taxpayers' accounts.
a
Does not apply.
b
Fee accumulated by certain trusts and exempt organizations for failure to file in a timely manner.
c
Trust fund penalties are assessed against responsible individuals of a business when they fail to pay
IRS the taxes they withheld from employees’ earnings
d
From fiscal year 1995 through 1998, abatements of accuracy penalties (section 6662(d)–(h))
accounted for an average of 78 percent of abatement amounts for other miscellaneous civil penalty
abatements. The remaining abatement amounts, averaging 22 percent, were spread over numerous
types of other miscellaneous civil penalties.
e
Negligence includes any failure to make a reasonable attempt to comply with the provisions of the
Code.
Source: GAO compilation of IRS data.
Page 36 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.9: Number and Amount of Penalty Abatements by Income Level and by Fiscal Year of Abatement—Individual Tax
Returns
Dollars in Millions Fiscal year of abatement
Income level reported on 1995 1996 1997 1998 Total
original return Number Amount Number Amount Number Amount Number Amount Number Amount
Individual nonbusiness
1040A TPI < $25,000 588,579 $281 621,497 $304 574,650 $315 576,303 $339 2,361,029 $1,239
Non-1040A TPI < $25,000 131,526 17 144,810 12 138,390 17 182,419 13 597,145 59
TPI $25,000 < $50,000 249,616 36 251,466 28 268,271 26 389,746 36 1,159,099 126
TPI $50,000 < $100,000 182,982 43 194,341 36 213,875 39 295,568 43 886,766 161
TPI $100,000 or more 202,668 165 173,992 144 149,475 167 199,977 184 726,112 660
Subtotal 1,355,371 $542 1,386,106 $524 1,344,661 $563 1,644,013 $616 5,730,151 $2,245
a
Individual business
C-TGR < $25,000 90,291 $13 82,830 $28 87,814 $7 125,285 $89 386,220 $138
C-TGR $25,000 < $100,000 153,361 55 131,533 37 127,896 27 198,049 36 610,839 156
C-TGR $100,000 or more 104,699 94 93,384 76 87,281 70 131,299 73 416,663 314
F-TGR < $100,000 5,435 1 5,071 1 5,083 1 6,326 1 21,915 4
F-TGR 100,000 or more 7,023 5 5,291 4 8,443 4 7,111 4 27,868 16
Subtotal 360,809 $169 318,109 $146 316,517 110 468,070 $203 1,463,505 $628
b
Income level not available 239,392 $743 194,577 $659 227,799 $680 261,220 $633 922,988 $2,715
Total penalty abatements 1,955,572 $1,454 1,898,792 $1,330 1,888,977 $1,352 2,373,303 $1,452 8,116,644 $5,588
Legend
1040A = Nonbusiness returns filed by individuals
TPI = Total positive income (income reported as a positive on tax return tables)
C-TGR = Form 1040 Schedule C (profit or loss from business) total gross receipts
F-TGR = Form 1040 Schedule F (profit or loss from farming) total gross receipts
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
a
Returns with Schedules C or F may be categorized as nonbusiness rather than business if the
reported primary source of income was wages, investments, and other nonbusiness income.
b
Income level was not available on certain miscellaneous civil penalties.
Source: GAO compilation of IRS data.
Page 37 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.10: Number and Amount of Interest Abatements by Income Level and by Fiscal Year of Abatement—Individual Tax
Returns
Dollars in Millions Fiscal year of abatement
Income level reported on 1995 1996 1997 1998 Total
original return Number Amount Number Amount Number Amount Number Amount Number Amount
Individual nonbusiness
1040A TPI < $25,000 484,237 $349 514,806 $349 557,349 $383 509,310 $385 2,065,702 $1,467
Non-1040A TPI < $25,000 157,246 27 171,338 14 181,239 18 190,116 12 699,939 71
TPI $25,000 < $50,000 298,861 44 299,003 39 448,283 31 474,163 28 1,520,310 142
TPI $50,000 < $100,000 217,128 54 227,703 34 377,843 34 391,470 36 1,214,144 158
TPI $100,000 or more 232,091 214 206,216 168 186,352 225 210,826 158 835,485 765
Subtotal 1,389,563 $688 1,419,066 $604 1,751,066 $692 1,775,885 $619 6,335,580 $2,603
a
Individual business
C-TGR < $25,000 76,600 $13 79,089 $11 98,780 $6 102,707 $8 357,176 $39
C-TGR $25,000 < $100,000 116,553 48 111,696 31 139,782 19 159,651 27 527,682 125
C-TGR $100,000 or more 88,756 124 83,745 88 87,724 68 104,220 73 364,445 353
F-TGR < $100,000 6,442 3 5,808 1 6,790 1 7,177 1 26,217 6
F-TGR 100,000 or more 6,766 6 6,045 8 7,038 8 7,733 3 27,582 24
Subtotal 295,117 $195 286,383 $139 340,114 $101 381,488 $112 1,303,102 $546
b
Income level not available 13,502 45 12,241 77 12,009 23 9,698 25 47,450 169
Total interest abatements 1,698,182 $927 1,717,690 $820 2,103,189 $816 2,167,071 $756 7,686,132 $3,319
Legend
1040A = Nonbusiness returns filed by individuals
TPI = Total positive income (income reported as a positive on tax return tables)
C-TGR = Form 1040 Schedule C (profit or loss from business) total gross receipts
F-TGR = Form 1040 Schedule F (profit or loss from farming) total gross receipts
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
a
Returns with Schedules C or F may be categorized as nonbusiness rather than business if the
reported primary source of income was wages, investments, and other nonbusiness income.
b
Income level was not available on certain miscellaneous civil penalties.
Source: GAO compilation of IRS data.
Page 38 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Tables IV.11-IV.14 show information on the number and amount of penalty
and interest abatements by tax year of return.
Table IV.11: Number of Penalty
Abatements by Tax Year and Fiscal Year Fiscal year of abatement
of Abatement—Individual Tax Returns Tax year of return 1995 1996 1997 1998 Total
a
Before 1980 3,379 1,805 856 1,074 7,114
1980-84 89,553 44,039 26,661 25,959 186,212
1985-89 443,094 277,406 202,511 219,915 1,142,926
1990 167,701 110,988 84,803 86,073 449,565
1991 229,634 152,397 104,899 102,122 589,052
1992 218,807 253,154 169,260 134,375 775,596
1993 409,116 258,460 194,973 174,236 1,036,785
1994 393,350 360,043 188,916 175,891 1,118,200
1995 938 439,097 409,480 285,014 1,134,529
b
1996 1,403 505,005 682,380 1,188,788
b b
1997 1,613 484,471 486,084
b b b
1998 1,793 1,793
Total penalty abatements 1,955,572 1,898,792 1,888,977 2,373,303 8,116,644
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Totals are based on abatements, not returns.
a
Earliest tax year was 1962.
b
Does not apply.
Source: GAO compilation of IRS data.
Table IV.12: Amount of Penalty
Abatements by Tax Year and Fiscal Year Dollars in Millions Fiscal year of abatement
of Abatement—Individual Tax Returns Tax year of return 1995 1996 1997 1998 Total
a
Before 1980 $9 $6 $5 $3 $23
1980-84 151 81 71 40 343
1985-89 522 357 259 210 1,348
1990 162 131 95 82 469
1991 184 153 121 107 565
1992 155 188 157 118 618
1993 217 161 194 150 722
1994 53 165 156 146 521
1995 1 86 209 150 447
b c
1996 84 238 323
b b
1997 1 208 209
b b b c c
1998
Total penalty abatements $1,454 $1,330 $1,352 $1,452 $5,588
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
a
Earliest tax year was 1962.
b
Does not apply.
c
Less than $1 million.
Source: GAO compilation of IRS data.
Page 39 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.13: Number of Interest
Abatements by Tax Year and Fiscal Year Fiscal year of abatement
of Abatement—Individual Tax Returns Tax year of return 1995 1996 1997 1998 Total
a
Before 1980 2,922 1,759 960 670 6,311
1980-84 34,093 19,826 14,392 8,877 77,188
1985-89 213,403 128,271 94,432 57,102 493,208
1990 111,210 65,093 47,409 28,565 252,277
1991 214,662 102,249 61,941 37,114 415,966
1992 238,902 239,965 134,261 64,442 677,570
1993 435,155 295,705 195,749 108,128 1,034,737
1994 447,362 380,853 195,589 134,077 1,157,881
1995 473 483,121 410,139 265,857 1,159,590
b
1996 848 947,431 660,200 1,608,479
b b
1997 886 801,287 802,173
b b b
1998 752 752
Total interest abatements 1,698,182 1,717,690 2,103,189 2,167,071 7,686,132
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Totals are based on abatements, not returns.
a
Earliest tax year was 1962.
b
Does not apply.
Source: GAO compilation of IRS data.
Table IV.14: Amount of Interest
Abatements by Tax Year and Fiscal Year Dollars in millions Fiscal year of abatement
of Abatement—Individual Tax Returns Tax year of return 1995 1996 1997 1998 Total
a
Before 1980 $82 $43 $25 $19 $169
1980-84 278 168 183 114 742
1985-89 355 303 238 180 1,077
1990 65 58 59 55 236
1991 65 59 52 55 231
1992 22 84 80 63 250
1993 45 59 90 93 287
1994 15 31 33 63 142
b
1995 15 33 40 89
c b
1996 21 55 77
c c b
1997 19 19
c c c b b
1998
Total interest abatements $927 $820 $816 $756 $3,319
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
a
Earliest tax year was 1962.
b
Less than $1 million.
c
Does not apply.
Source: GAO compilation of IRS data.
Page 40 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Tables IV.15-IV.21 show information on selected return characteristics for
penalties and/or interest abatements. Tables IV.19-IV.21 show the
characteristics for abatements of three specific types of penalties.
Table IV.15: Distribution of Returns With Penalty and Interest Abatements by Filing Status and Fiscal Year of Abatement—
Individual Tax Returns
Filing status
Fiscal year of penalty and Number of Married, filing Married, filing Head of Widow(er) with
interest abatement returns Single jointly separately household dependent child Total
a a a a a a a
1995
a a a a a a a
1996
1997 2,319,461 29.1% 52.5% 4.9% 13.5% 0.1% 100%
1998 2,721,264 31.6 50.9 5.3 12.2 0.1 100
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Percentages may not sum to 100 because of rounding.
a
IRS was unable to reconstruct the filing status data from its historical files within the time frames of
our review.
Source: GAO compilation of IRS data.
Table IV.16: Distribution of Returns With Penalty and Interest Abatements by Selected Characteristic and Fiscal Year of
Abatement—Individual Tax Returns
Selected characteristic
Fiscal year of penalty Number of Primary taxpayer Substitute for Paid preparer on Earned income credit
and interest abatement returns over age 65 return prepared original return on original return
1995 1,918,078 8.5% 12.5% 52.1% 3.9%
1996 1,933,715 9.3 13.8 50.8 4.3
1997 2,319,461 8.5 10.6 48.2 3.8
1998 2,721,264 8.6 7.0 52.8 4.9
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Percentages should not be totaled because abatements could occur on returns with more than one
selected characteristic.
Source: GAO compilation of IRS data.
Page 41 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.17: Distribution of Returns With Penalty Abatements by Selected Characteristic and Fiscal Year of Abatement—
Individual Tax Returns
Selected characteristic
Fiscal year of penalty Number of Primary taxpayer Substitute for Paid preparer on Earned income credit
abatement returns over age 65 return prepared original return on original return
1995 1,329,636 8.2% 16.7% 51.7% 2.9%
1996 1,351,348 9.1 18.5 49.7 3.1
1997 1,331,583 10.0 16.4 49.1 3.4
1998 1,761,327 9.1 9.6 55.1 4.9
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Percentages should not be totaled because abatements could occur on returns with more than one
selected characteristic.
Source: GAO compilation of IRS data.
Table IV.18: Distribution of Returns With Interest Abatements by Selected Characteristic and Fiscal Year of Abatement—
Individual Tax Returns
Selected characteristic
Fiscal year of interest Number of Primary taxpayer Substitute for Paid preparer on Earned income credit
abatement returns over age 65 return prepared original return on original return
1995 1,576,967 8.7% 12.5% 53.0% 2.4%
1996 1,595,320 9.5 13.7 51.7 2.6
1997 1,954,573 8.4 10.1 48.3 2.3
1998 2,000,680 9.0 6.9 51.6 2.4
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Percentages should not be totaled because abatements could occur on returns with more than one
selected characteristic.
Source: GAO compilation of IRS data.
Page 42 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.19: Distribution of Returns With Failure to File Penalty Abatements by Selected Characteristic and Fiscal Year of
Abatement—Individual Tax Returns
Selected characteristic
Fiscal year of failure to Number of Primary taxpayer Substitute for Paid preparer on Earned income credit
file penalty abatement returns over age 65 return prepared original return on original return
1995 429,811 3.7% 46.9% 30.0% 1.2%
1996 439,040 4.3 52.6 27.1 1.2
1997 434,432 5.1 45.0 31.0 1.9
1998 433,415 5.7 30.8 39.5 2.3
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Percentages should not be totaled because abatements could occur on returns with more than one
selected characteristic.
Source: GAO compilation of IRS data.
Table IV.20: Distribution of Returns With Estimated Payment Penalty Abatements by Selected Characteristic and Fiscal Year of
Abatement—Individual Tax Returns
Selected characteristic
Fiscal year of estimated Number of Primary taxpayer Substitute for Paid preparer on Earned income credit
payment penalty abatement returns over age 65 return prepared original return on original return
1995 249,270 8.8% 38.0% 41.5% 0.4%
1996 230,018 9.3 44.2 34.1 0.4
1997 210,414 12.3 39.8 36.9 0.4
1998 205,031 15.3 30.5 42.4 0.3
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Percentages should not be totaled because abatements could occur on returns with more than one
selected characteristic.
Source: GAO compilation of IRS data.
Table IV.21: Distribution of Returns With Failure to Pay Penalty Abatements by Selected Characteristic and Fiscal Year of
Abatement—Individual Tax Returns
Selected characteristic
Fiscal year of failure to Number of Primary taxpayer Substitute for Paid preparer on Earned income credit
pay penalty abatement returns over age 65 return prepared original return on original return
1995 914,793 9.5% 4.5% 63.3% 3.1%
1996 933,188 10.9 5.0 61.9 3.5
1997 920,358 11.6 5.6 58.9 3.5
1998 1,355,750 9.6 4.1 61.4 5.1
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Percentages should not be totaled because abatements could occur on returns with more than one
selected characteristic.
Source: GAO compilation of IRS data.
Page 43 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Tables IV.22-IV.27 show information on the number or amount of
abatements by selected IRS activities for penalties and interest combined,
or separately for penalty and interest on individual returns.
Table IV.22: Distribution of Number of Penalty and Interest Abatements on Returns Associated With Selected IRS Activity by
Fiscal Year of Abatement—Individual Tax Returns
a
Fiscal year of Selected IRS activity
penalty and
interest Number of Audit Substitute Additional tax Offer-in- Criminal
b c d e f g h
abatement abatements indicator for return assessments compromise Collection Litigation investigation
1995 3,653,754 10.5% 15.8% 30.1% 2.0% 97.6% 6.7% 0.2%
1996 3,616,482 11.1 17.7 31.1 0.9 97.7 4.0 0.1
1997 3,992,166 10.1 14.2 26.3 0.3 98.0 2.7 0.1
1998 4,540,374 10.7 9.2 22.5 0.2 97.7 3.0 0.1
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Percentages should not be totaled because abatements could be preceded by more than one
selected IRS activity.
a
IRS activity that occurred before the abatement.
b
Includes audits that are still open and audits closed with a change in tax assessments or no change
in tax assessments.
c
Return prepared by IRS based on third party information of income paid to a nonfiler.
d
IRS makes additional tax assessments after the original tax assessment because of an IRS
enforcement action, such as an audit, or a taxpayer action, such as filing amended returns.
e
IRS and taxpayer had reached an agreement on the portion of unpaid assessments the taxpayer
would pay.
f
Return was in collection stream (notices, installment agreements, delinquent accounts). Abatements
on full paid returns result in refunds to taxpayers and would not be in collection status.
g
Return was in some phase of the litigation process--open or closed. Would include bankruptcy cases
and cases settled or closed before trial.
h
IRS investigation of criminal wrongdoing associated with the return. Includes cases open and closed,
including those without further action by IRS.
Source: GAO compilation of IRS data.
Page 44 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.23: Distribution of Amount of Penalty and Interest Abatements on Returns Associated With Selected IRS Activity by
Fiscal Year of Abatement—Individual Tax Returns
Dollars in Millions
a
Fiscal year Selected IRS activity
of penalty
and interest Amount of Audit Substitute Additional tax d Offer-in- Criminal
b c e f g h
abatement abatements indicator for return assessments compromise Collection Litigation investigation
1995 $2,382 34.6% 16.4% 48.1% 9.2% 98.8% 25.2% 4.8%
1996 $2,150 34.8 21.4 49.6 4.7 98.9 19.3 2.7
1997 $2,168 35.8 22.7 50.7 1.9 98.9 15.9 4.1
1998 $2,208 35.5 21.8 44.1 1.3 98.3 12.9 2.3
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Percentages should not be totaled because abatements could be preceded by more than one
selected IRS activity.
a
IRS activity that occurred before the abatement.
b
Includes audits that are still open and audits closed with a change in tax assessments or no change
in tax assessments.
c
Return prepared by IRS based on third-party information of income paid to a nonfiler.
d
IRS makes additional tax assessments after the original tax assessment because of an IRS
enforcement action, such as an audit, or a taxpayer action, such as filing amended returns.
e
IRS and taxpayer had reached an agreement on the portion of unpaid assessments the taxpayer
would pay.
f
Return was in collection stream (notices, installment agreements, delinquent accounts). Abatements
on full paid returns result in refunds to taxpayers and would not be in collection status.
g
Return was in some phase of the litigation process--open or closed. Would include bankruptcy cases,
and cases settled or closed before trial.
h
IRS investigation of criminal wrongdoing associated with the return. Includes cases open and closed,
including those without further action by IRS.
Source: GAO compilation of IRS data.
Page 45 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.24: Distribution of Number of Penalty Abatements on Returns Associated With Selected IRS Activity by Fiscal Year of
Abatement—Individual Tax Returns
a
Fiscal year of Selected IRS activity
penalty Number of Audit Substitute Additional tax d Offer-in- Criminal
b c e f g h
abatement abatements indicator for return assessments compromise Collection Litigation investigation
1995 1,955,572 11.0% 18.6% 27.6% 2.5% 97.9% 8.5% 0.3%
1996 1,898,792 11.0 21.1 29.2 1.1 98.0 5.3 0.2
1997 1,888,977 10.3 18.4 25.8 0.4 97.3 3.9 0.1
1998 2,373,303 11.4 11.2 20.3 0.3 97.1 4.4 0.1
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Percentages should not be totaled because abatements could be preceded by more than one
selected IRS activity.
a
IRS activity that occurred before the abatement.
b
Includes audits that are still open and audits closed with a change in tax assessments or no change
in tax assessments.
c
Return prepared by IRS based on third-party information of income paid to a nonfiler.
d
IRS makes additional tax assessments after the original tax assessment because of an IRS
enforcement action, such as an audit, or a taxpayer action, such as filing amended returns.
e
IRS and taxpayer had reached an agreement on the portion of unpaid assessments the taxpayer
would pay.
f
Return was in collection stream (notices, installment agreements, delinquent accounts). Abatements
on full paid returns result in refunds to taxpayers and would not be in collection status.
g
Return was in some phase of the litigation process--open or closed. Would include bankruptcy cases,
and cases settled or closed before trial.
h
IRS investigation of criminal wrongdoing associated with the return. Includes cases open and closed,
including those without further action by IRS.
Source: GAO compilation of IRS data.
Page 46 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.25: Distribution of Amount of Penalty Abatements on Returns Associated With Selected IRS Activity by Fiscal Year of
Abatement—Individual Tax Returns
Dollars in Millions
a
Fiscal year Selected IRS activity
of penalty Amount of Audit Substitute Additional tax d Offer-in- Criminal
b c e f g h
abatement abatements indicator for return assessments compromise Collection Litigation investigation
1995 $1,454 20.6% 13.1% 28.7% 9.1% 98.7% 18.9% 2.9%
1996 1,330 21.1 17.0 30.7 4.9 99.0 15.4 1.8
1997 1,352 22.3 17.1 31.1 2.0 98.0 12.5 2.9
1998 1,452 22.2 14.4 26.1 1.2 98.6 10.7 1.4
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Percentages should not be totaled because abatements could be preceded by more than one
selected IRS activity.
a
IRS activity that occurred before the abatement.
b
Includes audits that are still open and audits closed with a change in tax assessments or no change
in tax assessments.
c
Return prepared by IRS based on third party information of income paid to a nonfiler.
d
IRS makes additional tax assessments after the original tax assessment because of an IRS
enforcement action, such as an audit, or a taxpayer action, such as filing amended returns.
e
IRS and taxpayer had reached an agreement on the portion of unpaid assessments the taxpayer
would pay.
f
Return was in collection stream (notices, installment agreements, delinquent accounts). Abatements
on full paid returns result in refunds to taxpayers and would not be in collection status.
g
Return was in some phase of the litigation process--open or closed. Would include bankruptcy cases,
and cases settled or closed before trial.
h
IRS investigation of criminal wrongdoing associated with the return. Includes cases open and closed,
including those without further action by IRS.
Source: GAO compilation of IRS data.
Page 47 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.26: Distribution of Number of Interest Abatements on Returns Associated With Selected IRS Activity by Fiscal Year of
Abatement—Individual Tax Returns
a
Fiscal year of Selected IRS activity
interest Number of Audit Substitute Additional tax d Offer-in- Criminal
b c e f g h
abatement abatements indicator for return assessments compromise Collection Litigation investigation
1995 1,698,182 10.0% 12.6% 33.0% 1.4% 97.4% 4.7% 0.2%
1996 1,717,690 11.2 13.8 33.2 0.6 97.4 2.7 0.1
1997 2,103,189 9.9 10.3 26.8 0.2 98.6 1.6 0.1
1998 2,167,071 10.1 7.1 24.8 0.1 98.3 1.4 0.1
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Percentages should not be totaled because abatements could be preceded by more than one
selected IRS activity.
a
IRS activity that occurred before the abatement.
b
Includes audits that are still open and audits closed with a change in tax assessments or no change
in tax assessments.
c
Return prepared by IRS based on third party information of income paid to a nonfiler.
d
IRS makes additional tax assessments after the original tax assessment because of an IRS
enforcement action, such as an audit, or a taxpayer action, such as filing amended returns.
e
IRS and taxpayer had reached an agreement on the portion of unpaid assessments the taxpayer
would pay.
f
Return was in collection stream (notices, installment agreements, delinquent accounts). Abatements
on full paid returns result in refunds to taxpayers and would not be in collection status.
g
Return was in some phase of the litigation process--open or closed. Would include bankruptcy cases,
and cases settled or closed before trial.
h
IRS investigation of criminal wrongdoing associated with the return. Includes cases open and closed,
including those without further action by IRS.
Source: GAO compilation of IRS data.
Page 48 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.27: Distribution of Amount of Interest Abatements on Returns Associated With Selected IRS Activity by Fiscal Year of
Abatement—Individual Tax Returns
Dollars in Millions
a
Fiscal year Selected IRS activity
of interest Amount of Audit Substitute Additional tax d Offer-in- Criminal
b c e f g h
abatement abatements indicator for return assessments compromise Collection Litigation investigation
1995 $927 56.7% 21.4% 78.5% 9.6% 99.1% 35.1% 7.7%
1996 820 57.1 28.6 80.3 4.3 98.8 25.5 4.2
1997 816 58.2 32.1 83.3 1.8 99.0 21.5 6.2
1998 756 61.1 36.0 78.8 1.3 97.7 17.3 4.1
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Percentages should not be totaled because abatements could be preceded by more than one
selected IRS activity.
a
IRS activity that occurred before the abatement.
b
Includes audits that are still open and audits closed with a change in tax assessments or no change
in tax assessments.
c
Return prepared by IRS based on third party information of income paid to a nonfiler.
d
IRS makes additional tax assessments after the original tax assessment because of an IRS
enforcement action, such as an audit, or a taxpayer action, such as filing amended returns.
e
IRS and taxpayer had reached an agreement on the portion of unpaid assessments the taxpayer
would pay.
f
Return was in collection stream (notices, installment agreements, delinquent accounts). Abatements
on full paid returns result in refunds to taxpayers and would not be in collection status.
g
Return was in some phase of the litigation process--open or closed. Would include bankruptcy cases,
and cases settled or closed before trial.
h
IRS investigation of criminal wrongdoing associated with the return. Includes cases open and closed,
including those without further action by IRS.
Source: GAO compilation of IRS data.
Page 49 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Tables IV.28-IV.55 show information on penalty and interest abatements on
business tax returns. Tables on corporate income tax, employment tax,
and other business tax returns, generally, are subsets of the tables titled
business tax returns.
Table IV.28: Number and Percent of Penalty and Interest Abatements by Fiscal Year of Abatement—Business Tax Returns
Fiscal year of abatement
1995 1996 1997 1998 Average
Penalty (IRC section) Number Percent Number Percent Number Percent Number Percent Number Percent
Failure to file (6651(a)(1)) 388,319 16.0 375,819 15.1 391,828 16.6 375,457 16.1 382,856 15.9
Estimated tax (6654 and 6655) 26,737 1.1 29,105 1.2 31,992 1.4 36,730 1.6 31,141 1.3
Failure to make tax deposit (6656) 866,594 35.6 809,347 32.5 773,695 32.7 740,374 31.7 797,503 33.2
Failure to furnish taxpayer
a a a a a a a a a a
identification number (6723)
b
Daily delinquency (6652(c)(2)(A)) 39,644 1.6 39,829 1.6 38,905 1.6 58,106 2.5 44,121 1.8
Miscellaneous civil-trust fund
c a a a a a a a a a a
(6672)
Miscellaneous civil-other (6721(e)
d
and others) 63,818 2.6 62,415 2.5 43,474 1.8 48,027 2.1 54,434 2.3
Incomplete partnership return
(6698) 4,661 0.2 3,321 0.1 3,077 0.1 2,339 0.1 3,350 0.1
Failure to pay (6651(a) (2)-(3)) 1,038,745 42.7 1,169,099 46.9 1,076,456 45.6 1,062,182 45.5 1,086,621 45.2
Bad check (6657) 2,037 0.1 1,977 0.1 2,879 0.1 8,665 0.4 3,890 0.2
a a a a a a a a a a
Tip income (6652(b))
e e e e e
Fraud (6663) 226 259 217 88 198
f e e e e e
Negligence (6662(c)) 485 453 369 210 379
Total penalty abatements 2,431,266 100.0 2,491,624 100.0 2,362,892 100.0 2,332,178 100.0 2,404,490 100.0
Interest abatements 1,376,550 100.0 1,499,031 100.0 1,403,958 100.0 1,365,054 100.0 1,411,148 100.0
Total 3,807,816 100.0 3,990,655 100.0 3,766,850 100.0 3,697,232 100.0 3,815,638 100.0
Note: Business tax returns include corporate income tax, various employment taxes, and other types
of returns on IRS’ business master file.
a
Does not apply.
b
Fee accumulated by certain trusts and exempt organizations for failure to file in a timely manner.
c
Trust fund penalties are assessed against responsible individuals of a business when they fail to pay
IRS the taxes they withheld from employees’ earnings.
d
From fiscal year 1995 through 1998, abatements of penalties for intentional disregard of the
information return filing requirements (section 6721(e)) accounted for an average of 75 percent of
other miscellaneous civil penalty abatements. The remaining abatements, averaging 25 percent, were
spread over numerous types of other miscellaneous civil penalties.
e
Less than one-tenth of 1 percent.
f
Negligence includes any failure to make a reasonable attempt to comply with the provisions of the
Code.
Source: GAO compilation of IRS data.
Page 50 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.29: Amount and Percent of Penalty and Interest Abatements by Fiscal Year of Abatement–Business Tax Returns
Dollars in Millions Fiscal year of abatement
1995 1996 1997 1998 Average
Penalty (IRC section) Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
Failure to file (6651(a)(1)) $606 17.5 $913 19.5 $977 23.3 $855 25.6 $838 21.4
Estimated tax (6654 and 6655) 76 2.2 122 2.6 103 2.5 184 5.5 122 3.1
Failure to make tax deposit (6656) 1,831 52.7 2,493 53.3 2,182 52.1 1,343 40.2 1,962 50.0
Failure to furnish taxpayer identification
a a a a a a a a a a
number (6723)
b
Daily delinquency (6652(c)(2)(A)) 55 1.6 58 1.2 55 1.3 110 3.3 70 1.8
c a a a a a a a a a a
Miscellaneous civil-trust fund (6672)
Miscellaneous civil-other (6721(e) and
d
others) 566 16.3 553 11.8 545 13.0 540 16.2 551 14.1
Incomplete partnership return (6698) 125 3.6 67 1.4 22 0.5 7 0.2 55 1.4
Failure to pay (6651(a) (2)-(3)) 205 5.9 467 10.0 286 6.8 264 7.9 306 7.8
e e e
Bad check (6657) 1 1 2 7 0.2 3 0.1
a a a a a a a a a a
Tip income (6652(b))
e
Fraud (6663) 5 0.1 4 0.1 3 0.1 1 3 0.1
f
Negligence (6662(c)) 2 0.1 3 0.1 13 0.3 29 0.9 12 0.3
Total penalty abatements $3,471 100.0 $4,680 100.0 $4,188 100.0 $3,343 100.0 $3,920 100.0
Interest abatements $1,720 100.0 $2,375 100.0 $1,972 100.0 $1,381 100.0 $1,862 100.0
Total $5,191 100.0 $7,054 100.0 $6,160 100.0 $4,724 100.0 $5,782 100.0
Notes: Business tax returns include corporate income tax, various employment taxes, and other types
of returns on IRS’ business master file.
Note: Amounts may not sum to totals because of rounding.
a
Does not apply.
b
Fee accumulated by certain trusts and exempt organizations for failure to file in a timely manner.
c
Trust fund penalties are assessed against responsible individuals of a business when they fail to pay
IRS the taxes they withheld from employees’ earnings.
d
From fiscal year 1995 through 1998, abatements of penalties for intentional disregard of the
information return filing requirements (section 6721(e)) accounted for an average of 86 percent of
abatement amounts for other miscellaneous civil penalty abatements. The remaining abatement
amounts, averaging 14 percent, were spread over numerous types of other miscellaneous civil
penalties.
e
Less than one-tenth of 1 percent.
f
Negligence includes any failure to make a reasonable attempt to comply with the provisions of the
Code.
Source: GAO compilation of IRS data.
Page 51 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.30: Percent of Penalty and Interest Abatements Computed Manually and by Computer by Fiscal Year of Abatement—
Business Tax Returns
Fiscal year of abatement
1995 1996 1997 1998
Penalty (IRC section) Manual Computer Manual Computer Manual Computer Manual Computer
Failure to file (6651(a)(1)) 47.7 52.3 46.6 53.4 51.3 48.7 50.1 49.9
Estimated tax (6654 and 6655) 77.3 22.7 82.7 17.3 82.8 17.2 85.6 14.4
Failure to make tax deposit (6656) 57.7 42.3 55.1 44.9 50.8 49.2 49.4 50.6
a a a a a a a a
Failure to furnish taxpayer identification number (6723)
b
Daily delinquency (6652(c)(2)(A)) 100.0 0 100.0 0 100.0 0 100.0 0
c
Miscellaneous civil-trust fund (6672) 100.0 0 100.0 0 100.0 0 100.0 0
d
Miscellaneous civil-other (6721(e) and others) 100.0 0 100.0 0 100.0 0 100.0 0
Incomplete partnership return (6698) 100.0 0 100.0 0 100.0 0 100.0 0
Failure to pay (6651(a) (2)-(3)) 11.8 88.2 9.5 90.5 9.9 90.1 11.0 89.0
Bad check (6657) 95.2 4.8 95.2 4.8 95.6 4.4 98.8 1.2
a a a a a a a a
Tip income (6652(b))
Fraud (6663) 100.0 0 100.0 0 100.0 0 100.0 0
e
Negligence (6662(c)) 100.0 0 100.0 0 100.0 0 100.0 0
Percent of total penalty abatements 38.4 61.6 34.6 65.4 34.4 65.6 35.0 65.0
Percent of interest abatements 1.8 98.2 1.4 98.6 1.3 98.7 1.2 98.8
Notes: Business tax returns include corporate income tax, various employment taxes, and other types
of returns on IRS’ business master file.
IRS employees manually make decisions on abatements when taxpayers establish that penalty
assessments are in error or they had reasonable cause for being delinquent. IRS computers
automatically abate all or portions of penalty and interest assessments when IRS reduces associated
tax or other penalty assessments or applies timely payments to taxpayers' accounts.
a
Does not apply.
b
Fee accumulated by certain trusts and exempt organizations for failure to file in a timely manner.
c
Trust fund penalties are assessed against responsible individuals of a business when they fail to pay
IRS the taxes they withheld from employees’ earnings.
d
From fiscal year 1995 through 1998, abatements of penalties for intentional disregard of the
information return filing requirements (section 6721(e)) accounted for an average of 75 percent of
other miscellaneous civil penalty abatements. The remaining abatements, averaging 25 percent, were
spread over numerous types of other miscellaneous civil penalties.
e
Negligence includes any failure to make a reasonable attempt to comply with the provisions of the
Code.
Source: GAO compilation of IRS data.
Page 52 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.31: Percent of Amount of Penalty and Interest Abatements Computed Manually and by Computer by Fiscal Year of
Abatement—Business Tax Returns
Fiscal year of abatement
1995 1996 1997 1998
Penalty (IRC section) Manual Computer Manual Computer Manual Computer Manual Computer
Failure to file (6651(a)(1)) 58.4 41.6 56.2 43.8 69.6 30.4 64.8 35.2
Estimated tax (6654 and 6655) 98.0 2.0 97.7 2.3 97.6 2.4 98.0 2.0
Failure to make tax deposit (6656) 83.7 16.3 84.9 15.1 77.7 22.3 72.0 28.0
a a a a a a a a
Failure to furnish taxpayer identification number (6723)
b
Daily delinquency (6652(c)(2)(A)) 100.0 0 100.0 0 100.0 0 100.0 0
c
Miscellaneous civil-trust fund (6672) 100.0 0 100.0 0 100.0 0 100.0 0
d
Miscellaneous civil-other (6721(e) and others) 100.0 0 100.0 0 100.0 0 100.0 0
Incomplete partnership return (6698) 100.0 0 100.0 0 100.0 0 100.0 0
Failure to pay (6651(a) (2)-(3)) 31.1 68.9 57.4 42.6 38.7 61.3 36.0 64.0
Bad check (6657) 82.9 17.1 99.1 0.9 99.6 0.4 99.9 0.1
a a a a a a a a
Tip income (6652(b))
Fraud (6663) 100.0 0 100.0 0 100.0 0 100.0 0
e
Negligence (6662(c)) 100.0 0 100.0 0 100.0 0 100.0 0
Percent of total penalty abatements 76.4 23.6 77.7 22.3 76.5 23.5 74.4 25.6
Percent of interest abatements 57.3 42.7 55.7 44.3 61.1 38.9 56.9 43.1
Notes: Business tax returns include corporate income tax, various employment taxes, and other types
of returns on IRS’ business master file.
IRS employees manually make decisions on abatements when taxpayers establish that penalty
assessments are in error or they had reasonable cause for being delinquent. IRS computers
automatically abate all or portions of penalty and interest assessments when IRS reduces associated
tax or other penalty assessments or applies timely payments to taxpayers' accounts.
a
Does not apply.
b
Fee accumulated by certain trusts and exempt organizations for failure to file in a timely manner.
c
Trust fund penalties are assessed against responsible individuals of a business when they fail to pay
IRS the taxes they withheld from employees’ earnings.
d
From fiscal year 1995 through 1998, abatements of penalties for intentional disregard of the
information return filing requirements (section 6721(e)) accounted for an average of 86 percent of
abatement amounts for other miscellaneous civil penalty abatements. The remaining abatement
amounts, averaging 14 percent, were spread over numerous types of other miscellaneous civil
penalties.
e
Negligence includes any failure to make a reasonable attempt to comply with the provisions of the
Code.
Source: GAO compilation of IRS data.
Page 53 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.32: Number and Percent of Penalty and Interest Abatements by Fiscal Year of Abatement—Corporate Income Tax
Returns
Fiscal year of abatement
1995 1996 1997 1998 Average
Penalty (IRC section) Number Percent Number Percent Number Percent Number Percent Number Percent
Failure to file (6651(a)(1)) 22,428 16.4 23,807 16.9 25,350 18.5 22,599 16.4 23,546 17.0
Estimated tax (6654 and 6655) 20,316 14.9 21,438 15.2 21,715 15.8 22,684 16.4 21,538 15.6
a a a a a a a a a a
Failure to make tax deposit (6656)
Failure to furnish taxpayer identification
a a a a a a a a a a
number (6723)
b a a a a a a a a a a
Daily delinquency (6652(c)(2)(A))
c a a a a a a a a a a
Miscellaneous civil-trust fund (6672)
Miscellaneous civil-other (6721(e) and
d
others) 142 0.1 186 0.1 229 0.2 204 0.1 190 0.1
a a a a a a a a a a
Incomplete partnership return (6698)
Failure to pay (6651(a) (2)-(3)) 93,552 68.5 95,213 67.6 89,670 65.4 92,345 66.8 92,695 67.1
Bad check (6657) 105 0.1 101 0.1 142 0.1 286 0.2 159 0.1
a a a a a a a a a a
Tip income (6652(b))
e e e e e
Fraud (6663) 30 24 29 16 25
f e e e e
Negligence (6662(c)) 70 0.1 41 48 26 46
Total penalty abatements 136,643 100.0 140,810 100.0 137,183 100.0 138,160 100.0 138,199 100.0
Interest abatements 117,415 100.0 120,185 100.0 118,260 100.0 122,757 100.0 119,654 100.0
Total 254,058 100.0 260,995 100.0 255,443 100.0 260,917 100.0 257,853 100.0
Note: Corporate returns include all Form 1120, Federal Corporate Income Tax returns.
a
Does not apply.
b
Fee accumulated by certain trusts and exempt organizations for failure to file in a timely manner.
c
Trust fund penalties are assessed against responsible individuals of a business when they fail to pay
IRS the taxes they withheld from employees’ earnings.
d
Because miscellaneous civil penalties account for less than 3 percent of all business penalties, we
did not develop information on specific penalties below the level of all businesses.
e
Less than one-tenth of 1 percent.
f
Negligence includes any failure to make a reasonable attempt to comply with the provisions of the
Code.
Source: GAO compilation of IRS data.
Page 54 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.33: Amount and Percent of Penalty and Interest Abatements by Fiscal Year of Abatement—Corporate Income Tax
Returns
Dollars in MiIlions Fiscal year of abatement
1995 1996 1997 1998 Average
Penalty (IRC section) Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
Failure to file (6651(a)(1)) $202 53.3 $434 49.2 $150 43.9 $190 39.8 $244 47.0
Estimated tax (6654 and 6655) 71 18.7 113 12.9 95 27.8 171 35.8 112 21.6
a a a a a a a a a a
Failure to make tax deposit (6656)
Failure to furnish taxpayer
a a a a a a a a a a
identification number (6723)
b a a a a a a a a a a
Daily delinquency (6652(c)(2)(A))
c a a a a a a a a a a
Miscellaneous civil-trust fund (6672)
Miscellaneous civil-other (6721(e) and
d
others) 2 0.5 2 0.2 3 0.8 2 0.5 2 0.4
a a a a a a a a a a
Incomplete partnership return (6698)
Failure to pay (6651(a) (2)-(3)) 100 26.5 331 37.5 80 23.5 84 17.6 149 28.7
e e f e e
Bad check (6657) 0.1 0.1 1 0.3 0.1
a a a a a a a a a a
Tip income (6652(b))
Fraud (6663) 2 0.6 1 0.1 2 0.5 1 0.1 1 0.3
g
Negligence (6662(c)) 1 0.3 1 0.1 11 3.4 28 5.9 10 2.0
Total penalty abatements $379 100.0 $881 100.0 $342 100.0 $477 100.0 $520 100.0
Interest abatements $1,243 100.0 $1,883 100.0 $1,299 100.0 $912 100.0 $1,334 100.0
Total $1,622 100.0 $2,765 100.0 $1,641 100.0 $1,389 100.0 $1,854 100.0
Notes: Corporate returns include all Form 1120, Federal Corporate Income Tax returns.
Amounts may not sum to totals because of rounding.
a
Does not apply.
b
Fee accumulated by certain trusts and exempt organizations for failure to file in a timely manner.
c
Trust fund penalties are assessed against responsible individuals of a business when they fail to pay
IRS the taxes they withheld from employees’ earnings.
d
Because miscellaneous civil penalties account for less than 3 percent of all business penalties we did
not develop information on specific penalties below the level of all businesses.
e
Less than $1 million.
f
Less than one-tenth of 1 percent.
g
Negligence includes any failure to make a reasonable attempt to comply with the provisions of the
Code.
Source: GAO compilation of IRS data.
Page 55 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.34: Number and Percent of Penalty and Interest Abatements by Fiscal Year of Abatements—Employment Tax Returns
Dollars in Millions Fiscal year of abatement
1995 1996 1997 1998 Average
Penalty (IRC section) Number Percent Number Percent Number Percent Number Percent Number Percent
Failure to file (6651(a)(1)) 266,206 13.9 241,556 13.3 228,085 13.0 229,001 12.8 241,212 13.3
a a a a a a a a a a
Estimated tax (6654 and 6655)
Failure to make tax deposit (6656) 824,772 43.2 779,226 42.8 745,366 42.4 716,595 40.1 766,490 42.1
Failure to furnish taxpayer
a a a a a a a a a a
identification number (6723)
b a a a a a a a a a a
Daily delinquency (6652(c)(2)(A))
Miscellaneous civil-trust fund
c a a a a a a a a a a
(6672)
Miscellaneous civil-other (6721(e)
d e e e e e
and others) 705 665 677 523 643
Incomplete partnership return
a a a a a a a a a a
(6698)
Failure to pay (6651(a) (2)-(3)) 816,661 42.8 798,850 43.8 782,587 44.5 833,261 46.6 807,840 44.4
Bad check (6657) 1,568 0.1 1,469 0.1 2,228 0.1 7,404 0.4 3,167 0.2
a a a a a a a a a a
Tip income (6652(b))
e e e e e
Fraud (6663) 67 41 140 42 73
f e e e e e
Negligence (6662(c)) 273 253 255 130 228
Total penalty abatements 1,910,252 100.0 1,822,060 100.0 1,759,338 100.0 1,786,956 100.0 1,819,652 100.0
Interest abatements 1,084,668 100.0 1,060,487 100.0 1,033,848 100.0 1,060,169 100.0 1,059,793 100.0
Total 2,994,920 100.0 2,882,547 100.0 2,793,186 100.0 2,847,125 100.0 2,879,445 100.0
Notes: Employment tax returns include Form 940, Employer's Annual Federal Unemployment Tax
Return; Form 941, Employer's Quarterly Federal Tax Return; Form 942, Employer’s Quarterly Federal
Return for Household Employees (for tax periods prior to the requirement that these taxes be reported
on Schedule H of the employer’s Form 1040); and Form 943, Employer's Annual Tax Return for
Agriculture Employees.
a
Does not apply.
a
Fee accumulated by certain trusts and exempt organizations for failure to file in a timely manner.
b
Trust fund penalties are assessed against responsible individuals of a business when they fail to pay
IRS the taxes they withheld from employees’ earnings.
c
Because miscellaneous civil penalties account for less than 3 percent of all business penalties, we
did not develop information on specific penalties below the level of all businesses.
e
Less than one-tenth of 1 percent.
f
Negligence includes any failure to make a reasonable attempt to comply with the provisions of the
Code.
Source: GAO compilation of IRS data.
Page 56 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.35: Amount and Percent of Penalty and Interest Abatements by Fiscal Year of Abatement—Employment Tax Returns
Dollars in Millions Fiscal year of abatement
1995 1996 1997 1998 Average
Penalty (IRC section) Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
Failure to file (6651(a)(1)) $134 7.6 $156 6.5 $243 10.7 117 8.3 $162 8.3
a a a a a a a a a a
Estimated tax (6654 and 6655)
Failure to make tax deposit (6656) 1,580 89.2 2,148 90.2 1,885 83.2 1,194 84.7 1,702 87.0
Failure to furnish taxpayer identification
a a a a a a a a a a
number (6723)
b a a a a a a a a a a
Daily delinquency (6652(c)(2)(A))
c a a a a a a a a a a
Miscellaneous civil-trust fund (6672)
Miscellaneous civil-other (6721(e) and
d
others) 1 0.1 5 0.2 2 0.1 2 0.2 3 0.1
a a a a a a a a a a
Incomplete partnership return (6698)
Failure to pay (6651(a) (2)-(3)) 54 3.1 70 3.0 132 5.8 92 6.5 87 4.5
e f e f f
Bad check (6657) 1 5 0.3 2 0.1
a a a a a a a a a a
Tip income (6652(b))
e f e f f e f e f
Fraud (6663) 1
g e f f e f f
Negligence (6662(c)) 1 0.1 1 1
Total penalty abatements $1,770 100.0 $2,381 100.0 $2,264 100.0 $1,410 100.0 $1,956 100.0
Interest abatements $219 100.0 $298 100.0 $436 100.0 $239 100.0 $298 100.0
Total $1,989 100.0 $2,679 100.0 $2,701 100.0 $1,649 100.0 $2,254 100.0
Notes: Employment tax returns include Form 940, Employer's Annual Federal Unemployment Tax
Return; Form 941, Employer's Quarterly Federal Tax Return; Form 942, Employer’s Quarterly Federal
Return for Household Employees (for tax periods prior to the requirement that these taxes be reported
on Schedule H of the employer’s Form 1040); and Form 943, Employer's Annual Tax Return for
Agriculture Employees.
Amounts may not sum to totals because of rounding.
a
Does not apply.
b
Fee accumulated by certain trusts and exempt organizations for failure to file in a timely manner.
c
Trust fund penalties are assessed against responsible individuals of a business when they fail to pay
IRS the taxes they withheld from employees’ earnings.
d
Because miscellaneous civil penalties account for less than 3 percent of all business penalties we did
not develop information on specific penalties below the level of all businesses.
e
Less than $1 million.
f
Less than one-tenth of 1 percent.
g
Negligence includes any failure to make a reasonable attempt to comply with the provisions of the
Code.
Source: GAO compilation of IRS data.
Page 57 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.36: Number and Percent of Penalty and Interest Abatements by Fiscal Year of Abatement—Other Business Tax
Returns
Fiscal year of abatement
1995 1996 1997 1998 Average
Penalty (IRC section) Number Percent Number Percent Number Percent Number Percent Number Percent
Failure to file (6651(a)(1)) 99,685 25.9 110,456 20.9 138,393 29.7 123,857 30.4 118,098 26.4
Estimated tax (6654 and 6655) 6,421 1.7 7,667 1.5 10,277 2.2 14,046 3.5 9,603 2.2
Failure to make tax deposit (6656) 41,822 10.9 30,121 5.7 28,329 6.1 23,779 5.8 31,013 6.9
Failure to furnish taxpayer identification
a a a a a a a a a a
number (6723)
b a
Daily delinquency (6652(c)(2)(A)) 39,644 10.3 39,829 7.5 38,905 8.3 58,106 14.3 9.9
c a a a a a a a a a a
Miscellaneous civil-trust fund (6672)
Miscellaneous civil-other (6721(e) and
d
others) 62,971 16.4 61,564 11.6 42,568 9.1 47,300 11.6 53,601 12.0
Incomplete partnership return (6698) 4,661 1.2 3,321 0.6 3,077 0.7 2,339 0.6 3,350 0.7
Failure to pay (6651(a) (2)-(3)) 128,532 33.4 275,036 52.0 204,199 43.8 136,576 33.6 186,086 41.7
Bad check (6657) 364 0.1 407 0.1 509 0.1 975 0.2 564 0.1
a a a a a a a a a a
Tip income (6652(b))
e e e e e
Fraud (6663) 129 194 48 30 100
f e e e e e
Negligence (6662(c)) 142 159 66 54 105
Total penalty abatements 384,371 100.0 528,754 100.0 466,371 100.0 407,062 100.0 446,640 100.0
Interest abatements 174,467 100.0 318,359 100.0 251,850 100.0 182,128 100.0 231,701 100.0
Total 558,838 100.0 847,113 100.0 718,221 100.0 589,190 100.0 678,341 100.0
Note: Other business tax returns include numerous types of returns, such as, estate, gift,
partnerships, and fiduciaries, and returns used by taxpayers to report withholdings from revenues
paid to nonemployees.
a
Does not apply.
b
Fee accumulated by certain trusts and exempt organizations for failure to file in a timely manner.
c
Trust fund penalties are assessed against responsible individuals of a business when they fail to pay
IRS the taxes they withheld from employees’ earnings.
d
Because miscellaneous civil penalties account for less than 3 percent of all business penalties we did
not develop information on specific penalties below the level of all businesses.
e
Less than one-tenth of 1 percent.
f
Negligence includes any failure to make a reasonable attempt to comply with the provisions of the
Code.
Source: GAO compilation of IRS data.
Page 58 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.37: Amount and Percent of Penalty and Interest Abatements by Fiscal Year of Abatement–Other Business Tax Returns
Dollars in Millions Fiscal year of abatement
1995 1996 1997 1998 Average
Penalty (IRC section) Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
Failure to file (6651(a)(1)) $270 20.4 $324 22.8 $584 36.9 $468 34.0 $411 28.9
Estimated tax (6654 and 6655) 5 0.4 9 0.6 9 0.5 14 1.0 9 0.6
Failure to make tax deposit (6656) 251 19.0 345 24.3 297 18.8 149 10.8 260 18.3
Failure to furnish taxpayer identification
a a a a a a a a a a
number (6723)
b
Daily delinquency (6652(c)(2)(A)) 55 4.2 58 4.1 55 3.5 110 8.0 70 4.9
c a a a a a a a a a a
Miscellaneous civil-trust fund (6672)
Miscellaneous civil-other (6721(e) and
d
others) 563 42.6 546 38.5 540 34.1 536 39.0 546 38.4
Incomplete partnership return (6698) 125 9.5 67 4.7 22 1.4 7 0.5 55 3.9
Failure to pay (6651(a) (2)-(3)) 50 3.8 66 4.7 73 4.6 88 6.4 70 4.9
e f e f e f f
Bad check (6657) 1 0.1 1
a a a a a a a a a a
Tip income (6652(b))
e f f
Fraud (6663) 2 0.2 2 0.2 1 1 0.1
g e f f
Negligence (6662(c)) 1 0.1 1 1 0.1 1 0.1
Total penalty abatements $1,322 100.0 $1,417 100.0 $1,582 100.0 $1,374 100.0 $1,424 100.0
Interest abatements $258 100.0 193 100.0 237 100.0 230 100.0 230 100.0
Total $1,580 100.0 $1,610 100.0 $1,819 100.0 $1,605 100.0 $1,653 100.0
Notes: Other business tax returns include numerous types of returns, such as, estate, gift,
partnerships, and fiduciaries, and returns used by taxpayers to report withholdings from revenues
paid to nonemployees.
Amounts may not sum to totals because of rounding.
a
Does not apply.
b
Fee accumulated by certain trusts and exempt organizations for failure to file in a timely manner.
c
Trust fund penalties are assessed against responsible individuals of a business when they fail to pay
IRS the taxes they withheld from employees’ earnings.
d
Because miscellaneous civil penalties account for less than 3 percent of all business penalties we did
not develop information on specific penalties below the level of all businesses.
e
Less than $1 million.
f
Less than one-tenth of 1 percent.
g
Negligence includes any failure to make a reasonable attempt to comply with the provisions of the
Code.
Source: GAO compilation of IRS data.
Page 59 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.38: Number and Amount of Penalty Abatements by Asset Size and Fiscal Year of Abatement—Corporate Income Tax
Returns
Dollars in Millions Fiscal year of abatement
Asset size reported on 1995 1996 1997 1998 Total
balance sheet Number Amount Number Amount Number Amount Number Amount Number Amount
Small corporation
a
No balance sheet 6,263 $49 6,916 $22 7,970 $35 7,793 $133 28,942 $239
Assets < $250,000 64,215 10 66,090 11 64,842 13 65,472 14 260,619 48
$250,000 < $1 million 32,973 11 33,266 14 31,566 14 32,021 15 129,826 54
$1 million < $5 million 17,865 15 19,287 19 17,991 23 17,948 24 73,091 81
$5 million < $10 million 3,231 8 3,459 10 3,379 14 3,558 13 13,627 45
Subtotal 124,547 $92 129,018 $76 125,748 $99 126,792 $199 506,105 $467
Large corporation
$10 million < $50 million 3,897 29 4,130 33 4,043 50 3,962 37 16,032 149
$50 million < $100 million 962 32 1,133 32 1,018 17 975 22 4,088 104
$100 million < $250 million 927 54 980 67 877 39 868 29 3,652 189
$250 million or more 1,032 153 1,097 665 1,133 132 1,097 185 4,359 1,134
Subtotal 6,818 $269 7,340 $796 7,071 $238 6,902 $273 28,131 1,577
b,
Asset size not available 5,278 18 4,452 9 4,364 5 4,466 5 18,560 36
Total penalty abatements 136,643 $379 140,810 $881 137,183 $342 138,160 $477 552,796 $2,079
Notes: Corporate returns include all Form 1120, Federal Corporate Income Tax returns.
We could not provide the asset size for businesses on noncorporate returns because the information
is only available for corporate income tax returns.
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
a
Taxpayer did not provide, or it is missing.
b
Asset size was not available on returns transferred from IRS' historical files or non-master file and on
special types of assessments.
Source: GAO compilation of IRS data.
Page 60 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.39: Number and Amount of Interest Abatements by Asset Size and Fiscal Year of Abatement–Corporate Income Tax
Returns
Dollars in Millions Fiscal year of abatement
Asset size reported on 1995 1996 1997 1998 Total
balance sheet Number Amount Number Amount Number Amount Number Amount Number Amount
Small corporation
a
No balance sheet 4,646 $33 4,949 $25 5,469 $52 5,751 $80 20,815 $190
Assets < $250,000 54,502 5 56,326 5 56,416 12 58,601 7 225,845 30
$250,000 < $1 million 27,116 6 27,746 12 26,674 8 27,762 7 109,298 32
$1 million < $5 million 14,892 9 16,061 9 14,836 11 15,523 12 61,312 41
$5 million < $10 million 2,961 4 2,891 4 2,882 7 3,011 6 11,745 22
Subtotal 104,117 $56 107,973 $56 106,277 $90 110,648 $113 429,015 $316
Large corporation
$10 million < $50 million 3,473 32 3,538 28 3,477 40 3,521 22 14,009 122
$50 million < $100 million 938 35 958 24 979 26 890 18 3,765 103
$100 million < $250 million 1,004 73 991 50 928 43 989 29 3,912 196
$250 million or more 2,124 981 2,240 1,678 2,179 1,007 2,250 714 8,793 4,380
Subtotal 7,539 $1,120 7,727 $1,781 7,563 $1,116 7,650 $783 30,479 $4,800
b
Asset size not available 5,759 $67 4,485 $47 4,420 $93 4,459 $16 19,123 $223
Total interest abatements 117,415 $1,243 120,185 $1,883 118,260 $1,299 122,757 $912 478,617 $5,338
Notes: Corporate returns include all Form 1120, Federal Corporate Income Tax returns.
We could not provide the asset size for businesses on noncorporate returns because the information
is only available for corporate income tax returns
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
a
Taxpayer did not provide, or it is missing.
b
Asset size was not available on returns transferred from IRS' historical files or non-master file and on
special types of assessments.
Source: GAO compilation of IRS data.
Page 61 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.40: Number of Penalty
Abatements by Tax Year and Fiscal Year Fiscal year of abatement
of Abatement—Business Tax Returns Tax year of return 1995 1996 1997 1998 Total
a
Before 1980 6,384 7,547 8,774 10,139 32,844
1980-84 5,397 3,135 2,039 1,021 11,592
1985-89 57,159 35,033 24,780 17,136 134,108
1990 34,437 16,959 10,295 6,621 68,312
1991 138,603 38,230 19,066 10,607 206,506
1992 135,813 117,874 34,265 16,335 304,287
1993 317,009 141,823 109,188 32,015 600,035
1994 1,482,759 365,451 132,619 82,529 2,063,358
1995 253,705 1,485,025 353,335 125,218 2,217,283
b
1996 280,547 1,394,962 374,352 2,049,861
b b
1997 273,569 1,319,677 1,593,246
b b b
1998 336,528 336,528
Total penalty abatements 2,431,266 2,491,624 2,362,892 2,332,178 9,617,960
Notes: Business tax returns include corporate income tax, various employment taxes, and other types
of returns on IRS’ business master file.
Totals are based on abatements, not returns.
a
Earliest tax year was 1962.
b
Does not apply.
Source: GAO compilation of IRS data.
Table IV.41: Amount of Penalty
Abatements by Tax Year and Fiscal Year Dollars in Millions Fiscal year of abatement
of Abatement—Business Tax Returns Tax year of return 1995 1996 1997 1998 Total
a
Before 1980 $56 $87 $90 $114 $347
1980-84 14 10 5 23 52
1985-89 80 51 60 30 221
1990 96 425 38 12 571
1991 597 193 26 16 832
1992 227 575 82 24 908
1993 519 206 581 95 1,400
1994 1,063 594 253 461 2,371
1995 820 2,160 1,012 241 4,232
b
1996 380 1,944 976 3,300
b b
1997 96 851 948
b b b
1998 499 499
Total penalty abatements $3,471 $4,680 $4,188 $3,343 $15,682
Notes: Business tax returns include corporate income tax, various employment taxes, and other types
of returns on IRS’ business master file.
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
a
Earliest tax year was 1962.
b
Does not apply.
Source: GAO compilation of IRS data.
Page 62 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.42: Number of Interest
Abatements by Tax Year and Fiscal Year Fiscal year of abatement
of Abatements—Business Tax Returns Tax year of return 1995 1996 1997 1998 Total
a
Before 1980 8,014 8,283 9,000 9,802 35,099
1980-84 3,892 2,277 1,587 898 8,654
1985-89 35,850 22,590 16,308 11,490 86,238
1990 22,991 11,567 7,150 4,988 46,696
1991 90,253 23,490 11,398 6,672 131,813
1992 84,576 69,478 19,824 9,427 183,305
1993 155,212 92,484 65,640 18,685 332,021
1994 842,380 189,132 73,258 35,761 1,140,531
1995 133,382 917,238 173,148 70,141 1,293,909
b
1996 162,492 856,939 180,485 1,199,916
b b
1997 169,706 824,356 994,062
b b b
1998 192,349 192,349
Total interest abatements 1,376,550 1,499,031 1,403,958 1,365,054 5,644,593
Notes: Business tax returns include corporate income tax, various employment taxes, and other types
of returns on IRS’ business master file.
Totals are based on abatements, not returns.
a
Earliest tax year was 1961.
b
Does not apply.
Source: GAO compilation of IRS data.
Table IV.43: Amount of Interest
Abatements by Tax Year and Fiscal Year Dollars in millions Fiscal year of abatement
of Abatement—Business Tax Returns Tax year of return 1995 1996 1997 1998 Total
a
Before 1980 $274 $260 $398 $166 $1,097
1980-84 418 321 323 219 1,282
1985-89 362 665 449 337 1,813
1990 268 297 111 82 757
1991 170 297 66 63 596
1992 48 264 80 52 444
1993 95 55 194 65 409
1994 76 111 73 68 327
1995 9 97 140 65 311
b
1996 9 131 145 284
b b
1997 8 111 118
b b b
1998 9 9
Total interest abatements $1,720 $2,375 $1,972 $1,381 $7,448
Notes: Business tax returns include corporate income tax, various employment taxes, and other types
of returns on IRS’ business master file.
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
a
Earliest tax year was 1961.
b
Does not apply.
Source: GAO compilation of IRS data.
Page 63 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.44: Number of Penalty
Abatements by Tax Year and Fiscal Year Fiscal year of abatement
of Abatement—Corporate Income Tax Tax year of return 1995 1996 1997 1998 Total
a
Returns Before 1980 94 43 38 25 200
1980-84 336 235 151 78 800
1985-89 2,717 1,627 1,005 579 5,928
1990 1,904 1,012 614 376 3,906
1991 3,600 1,743 917 539 6,799
1992 7,520 3,563 1,787 842 13,712
1993 33,035 7,823 3,798 1,745 46,401
1994 81,106 54,100 10,047 4,172 149,425
1995 6,331 64,053 42,465 9,456 122,305
b
1996 6,611 70,253 44,016 120,880
b b
1997 6,108 69,458 75,566
b b b
1998 6,874 6,874
Total penalty abatements 136,643 140,810 137,183 138,160 552,796
Notes: Corporate returns include all Form 1120, Federal Corporate Income Tax returns.
Totals are based on abatements, not returns.
a
Earliest tax year was 1964.
b
Does not apply.
Source: GAO compilation of IRS data.
Table IV.45: Amount of Penalty
Abatements by Tax Year and Fiscal Year Dollars in Millions Fiscal year of abatement
of Abatement—Corporate Income Tax Tax year of return 1995 1996 1997 1998 Total
a b b
Returns Before 1980 $3 $1 $4
1980-84 9 7 3 22 41
1985-89 18 18 29 14 79
1990 46 403 25 5 479
1991 131 113 5 3 252
1992 33 112 8 3 154
1993 90 12 7 5 113
1994 48 171 21 8 248
1995 1 45 160 30 237
c
1996 1 82 291 374
c c
1997 1 94 95
c c c
1998 2 2
Total penalty abatements $379 $881 $342 $477 $2,079
Notes: Corporate returns include all Form 1120, Federal Corporate Income Tax returns.
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
a
Earliest tax year was 1964.
b
Less than $1 million.
c
Does not apply.
Source: GAO compilation of IRS data.
Page 64 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.46: Number of Interest
Abatements by Tax Year and Fiscal Year Fiscal year of abatement
of Abatement—Corporate Income Tax Tax year of return 1995 1996 1997 1998 Total
a
Returns Before 1980 308 237 209 59 813
1980-84 737 598 397 257 1,989
1985-89 3,743 2,425 1,596 1,145 8,909
1990 2,914 1,389 869 585 5,757
1991 4,782 2,404 1,258 784 9,228
1992 7,865 4,751 2,585 1,280 16,481
1993 26,365 8,090 5,038 2,548 42,041
1994 65,585 43,957 10,443 5,749 125,734
1995 5,116 50,952 33,878 9,754 99,700
b
1996 5,382 56,880 36,464 98,726
b b
1997 5,107 58,237 63,344
b b b
1998 5,895 5,895
Total interest abatements 117,415 120,185 118,260 122,757 478,617
Notes: Corporate returns include all Form 1120, Federal Corporate Income Tax returns.
Totals are based on abatements, not returns.
a
Earliest tax year was 1961.
b
Does not apply.
Source: GAO compilation of IRS data.
Table IV.47: Amount of Interest
Abatements by Tax Year and Fiscal Year Dollars in Millions Fiscal year of abatement
of Abatement—Corporate Income Tax Tax year of return 1995 1996 1997 1998 Total
a
Returns Before 1980 $176 $163 $262 $40 $641
1980-84 351 312 315 214 1,191
1985-89 318 611 415 310 1,654
1990 247 283 98 73 702
1991 84 268 50 52 454
1992 24 158 39 41 263
1993 27 11 17 38 93
1994 16 65 21 23 125
b
1995 13 57 25 95
c b
1996 24 77 102
c c b
1997 18 18
c c c
1998 1 1
Total interest abatements $1,243 $1,883 $1,299 $912 $5,338
Notes: Corporate returns include all Form 1120, Federal Corporate Income Tax returns.
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
a
Earliest tax year was 1961.
b
Less than $1 million.
c
Does not apply.
Source: GAO compilation of IRS data.
Page 65 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.48: Number of Penalty
Abatements by Tax Year and Fiscal Year Fiscal year of abatement
of Abatement—Employment Tax Tax year of return 1995 1996 1997 1998 Total
a
Returns Before 1980 214 86 193 94 587
1980-84 3,899 2,117 1,550 731 8,297
1985-89 43,913 26,057 19,346 13,354 102,670
1990 25,635 12,453 7,621 5,008 50,717
1991 90,141 28,678 14,308 8,123 141,250
1992 96,289 72,760 25,060 12,128 206,237
1993 191,883 100,003 70,249 22,886 385,021
1994 1,215,070 196,633 85,261 40,995 1,537,959
1995 243,208 1,116,212 184,975 83,076 1,627,471
b
1996 267,061 1,092,954 198,627 1,558,642
b b
1997 257,821 1,081,064 1,338,885
b b b
1998 320,870 320,870
Total penalty abatements 1,910,252 1,822,060 1,759,338 1,786,956 7,278,606
Notes: Employment tax returns include Form 940, Employer's Annual Federal Unemployment Tax
Return; Form 941, Employer's Quarterly Federal Tax Return; Form 942, Employer’s Quarterly Federal
Return for Household Employees (for tax periods prior to the requirement that these taxes be reported
on Schedule H of the employer’s Form 1040); and Form 943, Employer's Annual Tax Return for
Agriculture Employees.
Totals are based on abatements, not returns.
a
Earliest tax year was 1962.
b
Does not apply.
Source: GAO compilation of IRS data.
Page 66 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.49: Amount of Penalty
Abatements by Tax Year and Fiscal Year Dollars in Millions Fiscal year of abatement
of Abatement—Employment Tax Tax year of return 1995 1996 1997 1998 Total
a b b b
Returns Before 1980 $2 $2
b
1980-84 2 $2 $1 4
1985-89 34 18 10 $7 69
1990 12 8 5 3 27
1991 55 21 10 6 93
1992 52 75 26 8 161
1993 160 63 135 20 378
1994 637 195 84 45 961
1995 816 1,623 355 89 2,883
c
1996 376 1,545 270 2,191
c c
1997 94 547 641
c c c
1998 496 496
Total penalty abatements $1,770 $2,381 $2,264 $1,491 $7,907
Notes: Employment tax returns include Form 940, Employer's Annual Federal Unemployment Tax
Return; Form 941, Employer's Quarterly Federal Tax Return; Form 942, Employer’s Quarterly Federal
Return for Household Employees (for tax periods prior to the requirement that these taxes be reported
on Schedule H of the employer’s Form 1040); and Form 943, Employer's Annual Tax Return for
Agriculture Employees.
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
a
Earliest tax year was 1962.
b
Less than $1 million.
c
Does not apply.
Source: GAO compilation of IRS data.
Page 67 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.50: Number of Interest
Abatements by Tax Year and Fiscal Year Fiscal year of abatement
of Abatement—Employment Tax Tax year of return 1995 1996 1997 1998 Total
a
Returns Before 1980 152 50 85 53 340
1980-84 2,316 1,164 930 486 4,896
1985-89 26,774 16,295 12,349 8,417 63,835
1990 17,219 8,419 5,250 3,780 34,668
1991 78,054 17,912 8,391 4,971 109,328
1992 68,501 57,361 14,501 6,686 147,049
1993 101,704 75,200 53,813 13,370 244,087
1994 665,634 109,771 53,040 24,085 852,530
1995 124,314 623,729 102,614 50,854 901,511
b
1996 150,586 627,866 106,504 884,956
b b
1997 155,009 663,091 818,100
b b b
1998 177,872 177,872
Total interest abatements 1,084,668 1,060,487 1,033,848 1,060,169 4,239,172
Notes: Employment tax returns include Form 940, Employer's Annual Federal Unemployment Tax
Return; Form 941, Employer's Quarterly Federal Tax Return; Form 942, Employer’s Quarterly Federal
Return for Household Employees (for tax periods prior to the requirement that these taxes be reported
on Schedule H of the employer’s Form 1040); and Form 943, Employer's Annual Tax Return for
Agriculture Employees.
Totals are based on abatements, not returns.
a
Earliest tax year was 1962.
b
Does not apply.
Source: GAO compilation of IRS data.
Page 68 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.51: Amount of Interest
Abatements by Tax Year and Fiscal Year Dollars in millions Fiscal year of abatement
of Abatement—Employment Tax Tax year of return 1995 1996 1997 1998 Total
a b b b b
Returns Before 1980 $1
1980-84 $3 $4 $3 $2 11
1985-89 31 36 23 16 106
1990 17 9 10 5 42
1991 81 27 10 8 126
1992 19 99 34 9 162
1993 24 40 171 20 255
1994 34 25 39 38 136
1995 8 49 59 29 146
c
1996 8 80 35 123
c c
1997 7 69 76
c c c
1998 8 8
Total interest abatements $219 $298 $436 $239 $1,192
Notes: Employment tax returns include Form 940, Employer's Annual Federal Unemployment Tax
Return; Form 941, Employer's Quarterly Federal Tax Return; Form 942, Employer’s Quarterly Federal
Return for Household Employees (for tax periods prior to the requirement that these taxes be reported
on Schedule H of the employer’s Form 1040); and Form 943, Employer's Annual Tax Return for
Agriculture Employees.
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
a
Earliest tax year was 1962.
b
Less than $1 million.
c
Does not apply.
Source: GAO compilation of IRS data.
Page 69 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.52: Number of Penalty
Abatements by Tax Year and Fiscal Year Fiscal year of abatement
of Abatement—Other Business Tax Tax year of return 1995 1996 1997 1998 Total
a
Returns Before 1980 6,076 7,418 8,543 10,020 32,057
1980-84 1,162 783 338 212 2,495
1985-89 10,529 7,349 4,429 3,203 25,510
1990 6,898 3,494 2,060 1,237 13,689
1991 44,862 7,809 3,841 1,945 58,457
1992 32,004 41,551 7,418 3,365 84,338
1993 92,091 33,997 35,141 7,384 168,613
1994 186,583 114,718 37,311 37,362 375,974
1995 4,166 304,760 125,895 32,686 467,507
b
1996 6,875 231,755 131,709 370,339
b b
1997 9,640 169,155 178,795
b b b
1998 8,784 8,784
Total penalty abatements 384,371 528,754 466,371 407,062 1,786,558
Notes: Other business tax returns include numerous types of returns, such as, estate, gift,
partnerships, and fiduciaries, and returns used by taxpayers to report withholdings from revenues
paid to nonemployees.
Totals are based on abatements, not returns.
a
Earliest tax year was 1963.
b
Does not apply.
Source: GAO compilation of IRS data.
Table IV.53: Amount of Penalty
Abatements by Tax Year and Fiscal Year Dollars in Millions Fiscal year of abatement
of Abatement—Other Business Tax Tax year of return 1995 1996 1997 1998 Total
a
Returns Before 1980 $51 $86 $90 $114 $341
b
1980-84 4 1 1 7
1985-89 28 15 21 9 73
1990 38 14 9 4 64
1991 410 58 11 7 487
1992 142 389 48 13 592
1993 270 132 439 69 909
1994 377 228 149 408 1,161
1995 2 492 497 122 1,112
c
1996 2 317 416 735
c c
1997 1 211 212
c c c
1998 1 1
Total penalty abatements $1,322 $1,417 $1,582 $1,374 $5,695
Notes: Other business tax returns include numerous types of returns, such as, estate, gift,
partnerships, and fiduciaries, and returns used by taxpayers to report withholdings from revenues
paid to nonemployees. Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
a
Earliest tax year was 1963.
b
Less than $1 million.
c
Does not apply.
Source: GAO compilation of IRS data.
Page 70 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IV
Abatements of Penalty and Interest Assessments on Individual and Business Tax Returns
Table IV.54: Number of Interest
Abatements by Tax Year and Fiscal Year Fiscal year of abatement
of Abatement—Other Business Tax Tax year of return 1995 1996 1997 1998 Total
a
Returns Before 1980 7,554 7,996 8,706 9,690 33,946
1980-84 839 515 260 155 1,769
1985-89 5,333 3,870 2,363 1,928 13,494
1990 2,858 1,759 1,031 623 6,271
1991 7,417 3,174 1,749 917 13,257
1992 8,210 7,366 2,738 1,461 19,775
1993 27,143 9,194 6,789 2,767 45,893
1994 111,161 35,404 9,775 5,927 162,267
1995 3,952 242,557 36,656 9,533 292,698
b
1996 6,524 172,193 37,517 216,234
b b
1997 9,590 103,028 112,618
b b b
1998 8,582 8,582
Total interest abatements 174,467 318,359 251,850 182,128 926,804
Notes: Other business tax returns include numerous types of returns, such as, estate, gift,
partnerships, and fiduciaries, and returns used by taxpayers to report withholdings from revenues
paid to nonemployees.
Totals are based on abatements, not returns.
a
Earliest tax year was 1963.
b
Does not apply.
Source: GAO compilation of IRS data.
Table IV.55: Amount of Interest
Abatements by Tax Year and Fiscal Year Dollars in millions Fiscal year of abatement
of Abatement—Other Business Tax Tax year of return 1995 1996 1997 1998 Total
a
Returns Before 1980 $97 $97 $135 $126 $455
1980-84 65 5 6 3 79
1985-89 13 18 11 11 54
1990 3 4 2 4 13
1991 5 2 6 3 16
1992 4 6 6 2 19
1993 44 4 6 7 62
1994 25 21 13 7 66
1995 1 35 24 11 70
b c
1996 27 33 59
b b c
1997 23 24
b b b
1998 1 1
Total interest abatements $258 $193 $237 $230 $918
Notes: Other business tax returns include numerous types of returns, such as, estate, gift,
partnerships, and fiduciaries, and returns used by taxpayers to report withholdings from revenues
paid to nonemployees.
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
a
Earliest tax year was 1963.
b
Does not apply.
c
Less than $1 million.
Source: GAO compilation of IRS data.
Page 71 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix V
Abatements of Tax Assessments on Individual
and Business Tax Returns
Table V.1: Number and Distribution of Tax Abatements by Fiscal Year of Abatement—Individual and Business Tax Returns
Fiscal year of abatement
1995 1996 1997 1998 Total
Abatement type Number Percent Number Percent Number Percent Number Percent Number Percent
Abatement of prior tax
assessment—non-
Examination 2,320,900 87.9 2,129,665 87.2 3,132,257 91.3 2,818,688 91.0 10,401,510 89.6
Abatement of prior tax
assessment—Examination 65,928 2.5 73,305 3.0 65,556 1.9 58,847 1.9 263,636 2.3
Abatements due to net
operating loss carryback 254,443 9.6 240,031 9.8 233,545 6.8 221,137 7.1 949,156 8.2
Total 2,641,271 100.0 2,443,001 100.0 3,431,358 100.0 3,098,672 100.00 11,614,302 100.0
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income. Business tax returns
include corporate income tax, various employment taxes, and other types of returns on IRS’ business
master file.
Totals are based on abatements, not returns.
Columns may not sum to totals because of rounding.
Source: GAO compilation of IRS data.
Table V.2: Amount and Distribution of Tax Abatements by Fiscal Year of Abatement—Individual and Business Tax Returns
Dollars in Millions Fiscal year of abatement
1995 1996 1997 1998 Total
Abatement type Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
Abatement of prior tax
assessment—non-Examination $9,249 44.4 $10,005 44.5 $10,384 46.9 $10,172 45.7 $39,810 45.4
Abatement of prior tax
assessment—Examination 3,176 15.3 3,608 16.0 3,140 14.2 3,317 14.9 13,241 15.1
Abatements due to net
operating loss carryback 8,395 40.3 8,875 39.5 8,595 38.9 8,751 39.4 34,617 39.4
Total $20,820 100.0 $22,489 100.0 $22,119 100.0 $22,240 100.0 $87,668 100.0
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income. Business tax returns
include corporate income tax, various employment taxes, and other types of returns on IRS’ business
master file.
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
Source: GAO compilation of IRS data.
Page 72 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix V
Abatements of Tax Assessments on Individual and Business Tax Returns
Tables V.3-V.5 show information on the three types of tax abatements for
individual returns, business tax returns, and corporate income tax returns.
Table V.3: Number and Amount of Tax Abatements by Fiscal Year of Abatement—Individual Tax Return
Dollars in Millions Fiscal year of abatement
1995 1996 1997 1998 Total
Abatement type Number Amount Number Amount Number Amount Number Amount Number Amount
Abatement of prior tax
assessment—non-
Examination 1,751,338 $2,987 1,648,301 $3,056 2,710,881 $3,738 2,426,144 $3,938 8,536,664 $13,720
Abatement of prior tax
assessment—Examination 52,146 410 53,936 464 51,624 468 45,915 435 203,621 1,777
Abatements due net
operating loss carryback 102,714 995 91,837 1,178 86,030 1,060 76,500 1,095 357,081 4,327
Total 1,906,198 $4,392 1,794,074 $4,699 2,848,535 $5,266 2,548,559 $5,468 9,097,366 $19,824
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
Source: GAO compilation of IRS data.
Table V.4: Number and Amount of Tax Abatements by Fiscal Year of Abatement—Business Tax Returns
Dollars in Millions Fiscal year of abatement
1995 1996 1997 1998 Total
Abatement type Number Amount Number Amount Number Amount Number Amount Number Amount
Abatement of prior tax
assessment—non-Examination 569,562 $6,262 481,364 $6,949 421,376 $6,646 392,544 $6,234 1,864,846 $26,090
Abatement of prior tax
assessment—Examination 13,782 2,766 19,369 3,144 13,932 2,672 12,932 2,881 60,015 11,463
Abatements due to net
operating loss carryback 151,729 7,401 148,194 7,697 147,515 7,535 144,637 7,657 592,075 30,290
Total 735,073 $16,428 648,927 $17,790 582,823 $16,853 550,113 $16,772 2,516,936 $67,843
Notes: Business tax returns include corporate income tax, various employment taxes, and other types
of returns on IRS’ business master file.
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
Source: GAO compilation of IRS data.
Page 73 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix V
Abatements of Tax Assessments on Individual and Business Tax Returns
Table V.5: Number and Amount of Tax Abatements by Fiscal Year of Abatement—Corporate Income Tax Returns
Dollars in Millions Fiscal year of abatement
1995 1996 1997 1998 Total
Abatement type Number Amount Number Amount Number Amount Number Amount NumberAmount
Abatement of prior tax
assessment—non-Examination 23,661 $1,554 23,489 $2,175 24,420 $1,742 23,551 $1,098 95,121 $6,568
Abatement of prior tax
assessment—Examination 5,025 2,205 5,661 2,716 5,785 2,252 5,566 2,539 22,037 9,713
Abatements due to net
operating loss carryback 148,183 7,372 145,409 7,670 145,023 7,507 142,127 7,623 580,742 30,172
Total 176,869 $11,131 174,559 $12,560 175,228 $11,501 171,244 $11,260 697,900 $46,452
Notes: Corporate returns include all Form 1120, Federal Corporate Income Tax returns.
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
Source: GAO compilation of IRS data.
Tables V.6-V.8 show one of the three types of tax abatements by corporate
asset size.
Table V.6: Number and Amount of Non-Examination Tax Abatements by Asset Size and Fiscal Year of Abatement—Corporate
Income Tax Returns
Dollars in Millions Fiscal year of abatement
Asset size reported on 1995 1996 1997 1998 Total
balance sheet Number Amount Number Amount Number Amount Number Amount Number Amount
Small corporation
a
No balance sheet 1,151 $153 1,276 $48 1,577 $97 1,448 $204 5,452 $503
Assets < $250,000 9,851 27 10,205 26 10,574 33 10,277 36 40,907 121
$250,000 < $1 million 5,029 30 4,782 36 4,967 40 4,855 39 19,633 145
$1 million < $5 million 3,414 44 3,326 47 3,400 62 3,322 58 13,462 212
$5 million < $10 million 794 23 759 20 738 24 784 33 3,075 101
Subtotal 20,239 $277 20,348 $178 21,256 $256 20,686 $370 82,529 $1,081
Large corporation
$10 million < $50 million 1,183 $60 1,193 $80 1,104 $137 1,002 $95 4,482 $372
$50 million < $100 million 396 98 390 64 393 41 344 97 1,523 299
$100 million < $250 million 425 180 346 102 366 105 388 105 1,525 493
$250 million or more 540 816 460 1,729 494 1,152 480 414 1,974 4,110
Subtotal 2,544 $1,153 2,389 $1,974 2,357 $1,436 2,214 $711 9,504 $5,274
b
Asset size not available 878 $124 752 $22 807 $49 651 $17 3,088 $212
Total 23,661 $1,554 23,489 $2,175 24,420 $1,742 23,551 $1,098 95,121 $6,568
Notes: Corporate returns include all Form 1120, Federal Corporate Income Tax returns.
We could not provide the asset size for businesses on noncorporate returns because the information
is only available for corporate income tax returns.
Totals are based on abatements, not returns.
a
Taxpayer did not provide ,or it was missing.
b
Asset size was not available on returns transferred from IRS’ historical files or non-master file and on
special types of assessments.
Source: GAO compilation of IRS data.
Page 74 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix V
Abatements of Tax Assessments on Individual and Business Tax Returns
Table V.7: Number and Amount of Examination Tax Abatements by Asset Size and Fiscal Year of Abatement—Corporate
Income Tax Returns
Dollars in Millions Fiscal year of abatement
Asset size reported on 1995 1996 1997 1998 Total
balance sheet Number Amount Number Amount Number Amount Number Amount Number Amount
Small corporation
a
No balance sheet 167 $36 171 $67 204 $76 183 $171 725 $350
Assets < $250,000 417 2 611 4 794 11 581 14 2,403 30
$250,000 < $1 million 493 5 667 6 874 11 767 8 2,801 30
$1 million < $5 million 703 12 808 16 992 25 990 22 3,493 75
$5 million < $10 million 309 9 294 11 354 15 414 15 1,371 50
Subtotal 2,089 $64 2,551 $104 3,218 $138 2,935 $230 10,793 $535
Large corporation
$10 million < $50 million 750 $95 892 $79 748 $74 739 $67 3,129 $315
$50 million < $100 million 318 59 279 45 245 51 266 101 1,108 257
$100 million < $250 million 372 134 423 105 322 120 373 103 1,490 462
$250 million or more 1,018 1,738 1,122 2,295 1,024 1,804 1,072 2,005 4,236 7,842
Subtotal 2,458 $2,027 2,716 $2,524 2,339 $2,049 2,450 $2,276 9,963 $8,876
b
Asset size not available 478 $114 394 $88 228 $65 181 $34 1,281 $302
Total 5,025 $2,205 5,661 $2,716 5,785 $2,252 5,566 $2,539 22,037 $9,713
Notes: Corporate returns include all Form 1120, Federal Corporate Income Tax returns.
We could not provide the asset size for businesses on noncorporate returns because the information
is only available for corporate income tax returns.
Totals are based on abatements, not returns.
a
Taxpayer did not provide, or it was missing.
b
Asset size was not available on returns transferred from IRS’ historical files or non-master file and on
special types of assessments.
Source: GAO compilation of IRS data.
Page 75 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix V
Abatements of Tax Assessments on Individual and Business Tax Returns
Table V.8: Number and Amount of Tax Abatements Due to Net Operating Loss Carryback by Asset Size and Fiscal Year of
Abatement—Corporate Income Tax Returns
Dollars in Millions Fiscal year of abatement
Asset size reported on 1995 1996 1997 1998 Total
balance sheet Number Amount Number Amount Number Amount Number Amount Number Amount
Small corporation
a
No balance sheet 1,091 $791 1,082 $380 959 $131 1,000 $122 4,132 $1,424
Assets < $250,000 70,049 111 75,912 149 76,850 145 74,324 148 297,135 553
$250,000 < $1 million 35,042 183 38,388 217 38,760 233 38,645 251 150,835 885
$1 million < $5 million 19,993 305 18,157 366 18,420 427 18,506 447 75,076 1,546
$5 million < $10 million 7,256 171 3,723 195 3,126 206 3,111 247 17,216 819
Subtotal 133,431 $1,560 137,262 $1,308 138,115 $1,143 135,586 $1,215 544,394 $5,227
Large corporation
$10 million < $50 million 3,143 $569 3,206 $575 3,333 $594 3,381 $716 13,063 $2,454
$50 million < $100 million 719 309 738 323 687 345 718 373 2,862 1,350
$100 million < $250 million 699 332 736 517 738 663 748 616 2,921 2,128
$250 million or more 1,051 4,283 1,179 4,756 1,082 4,462 1,069 4,646 4,381 18,146
Subtotal 5,612 $5,493 5,859 $6,171 5,840 $6,064 5,916 $6,350 23,227 $24,078
b
Asset size not available 9,140 $319 2,288 $191 1,068 $300 625 $57 13,121 $867
Total 148,183 $7,372 145,409 $7,670 145,023 $7,507 142,127 $7,623 580,742 $30,172
Notes: Corporate returns include all Form 1120, Federal Corporate Income Tax returns.
We could not provide the asset size for businesses on noncorporate returns because the information
is only available for corporate income tax returns.
Totals are based on abatements, not returns.
a
Taxpayer did not provide, or it was missing.
b
Asset size was not available on returns transferred from IRS’ historical files or non-master file and on
special types of assessments.
Source: GAO compilation of IRS data.
Page 76 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix VI
Abatements Associated With Tax, Penalty,
and Interest Assessments on Substitute for
Returns
The Internal Revenue Service uses third-party information to prepare a
substitute for return for nonfilers. IRS prepares the return without
knowledge of filing status, exemptions, and other deductions. When the
notice of deficiency is received, some taxpayers file a corrected return. IRS
will then abate any overassessed portion of tax, penalty, and interest.
In this appendix, we have excluded tables on return characteristics
because the data are unreliable, such as filing status and exemptions, or do
not apply, such as paid preparer.
Table VI.1: Number and Amount of Abatements Associated With Assessments on Substitute for Returns by Fiscal Year of
Abatement–Individual and Business Tax Returns
Dollars in Millions Abatement type
Tax Penalty Interest Total
Fiscal year of abatement Number Amount Number Amount Number Amount Number Amount
1995 215,315 $756 454,182 $249 255,100 $219 924,597 $1,225
1996 234,138 878 466,613 274 267,216 256 967,967 1,408
1997 203,262 910 419,399 319 250,433 288 873,094 1,516
1998 152,440 869 347,449 283 191,494 306 691,383 1,457
Total 805,155 $3,412 1,687,643 $1,125 964,243 $1,069 3,457,041 $5,606
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income. Business tax returns
include corporate income tax, various employment taxes, and other types of returns on IRS’ business
master file.
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
Source: GAO compilation of IRS data.
Table VI.2: Number and Amount of Abatements Associated With Assessments on Substitute for Returns by Fiscal Year of
Abatement–Individual Tax Returns
Dollars in Millions Abatement type
Tax Penalty Interest Total
Fiscal year of abatement Number Amount Number Amount Number Amount Number Amount
1995 179,375 $614 364,291 $191 214,396 $199 758,062 $1,003
1996 207,410 757 401,402 225 236,961 235 845,773 1,217
1997 174,187 763 348,275 232 217,238 261 739,700 1,256
1998 119,660 667 265,036 209 153,931 272 538,627 1,148
Total 680,632 $2,801 1,379,004 $856 822,526 $967 2,882,162 $4,624
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
Source: GAO compilation of IRS data.
Page 77 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix VI
Abatements Associated With Tax, Penalty, and Interest Assessments on Substitute for
Returns
Table VI.3: Number of Abatements Associated With Assessments on Substitute for Returns by Tax Year and Fiscal Year of
Abatement–Individual Tax Returns
Fiscal year of abatement
Tax year of return 1995 1996 1997 1998 Total
a
Before 1980 20 6 5 10 41
1980-84 17,355 13,383 10,291 7,563 48,592
1985-89 287,750 199,687 148,612 97,983 734,032
1990 169,127 116,575 86,082 53,566 425,350
1991 226,368 176,137 108,462 65,480 576,447
1992 56,805 284,205 217,535 104,086 662,631
1993 624 55,500 159,219 138,389 353,732
1994 13 265 9,194 53,885 63,357
1995 0 15 291 14,041 14,347
b
1996 0 9 3,620 3,629
b b
1997 0 4 4
b b b
1998 0 0
Total 758,062 845,773 739,700 538,627 2,882,162
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Totals are based on abatements, not returns.
a
Earliest tax year was 1978.
b
Does not apply.
Source: GAO compilation of IRS data.
Table VI.4: Amount of Abatements Associated With Assessments on Substitute for Returns by Tax Year and Fiscal Year of
Abatement–Individual Tax Returns
Dollars in Thousands Fiscal year of abatement
Tax year of return 1995 1996 1997 1998 Total
a b
Before 1980 $124 $16 $1 $142
1980-84 26,503 18,153 12,012 $8,693 65,361
1985-89 419,778 349,063 294,944 243,017 1,306,801
1990 205,038 162,111 142,247 121,652 631,048
1991 288,068 229,396 168,765 140,057 826,286
1992 63,245 382,587 301,334 189,936 937,103
1993 299 75,586 307,724 274,721 658,330
1994 15 182 28,664 124,380 153,240
1995 0 8 325 33,104 33,436
c
1996 0 4 12,315 12,319
c c
1997 0 37 37
c c c
1998 0 0
Total $1,003,069 $1,217,101 $1,256,020 $1,147,912 $4,624,103
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Totals are based on abatements, not returns.
a
Earliest tax year was 1978.
b
Less than $1,000.
c
Does not apply.
Source: GAO compilation of IRS data.
Page 78 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix VII
Abatements of Tax, Penalty, and Interest
Assessments Associated With Tax on Original
Return
Original tax assessments are from returns filed by taxpayers. All
abatements of tax, penalty, and interest shown in this appendix are
associated with the tax assessment on the original return because IRS had
not assessed additional taxes before these abatements. We have excluded
substitute for return data fields from this set of tables as these types of
returns do not show an original tax assessment amount and would not
result in an abatement without an intervening tax assessment.
Table VII.1: Number and Amount of Abatements Associated With Tax on Original Return by Fiscal Year of Abatement–
Individual and Business Tax Returns
Dollars in Millions Abatement type
Tax Penalty Interest Total
Fiscal year of abatement Number Amount Number Amount Number Amount Number Amount
1995 2,182,626 $13,353 3,711,340 $4,135 2,327,540 $598 8,221,506 $18,086
1996 1,955,283 15,049 3,708,611 5,138 2,471,001 1,104 8,134,895 21,291
1997 2,981,590 14,058 3,655,941 4,835 2,797,727 656 9,435,258 19,549
1998 2,732,542 16,452 4,149,059 4,276 2,881,971 630 9,763,572 21,357
Total 9,852,041 $58,912 15,224,951 $18,383 10,478,239 $2,988 35,555,231 $80,284
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income. Business tax returns
include corporate income tax, various employment taxes, and other types of returns on IRS’ business
master file.
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
Source: GAO compilation of IRS data.
Table VII.2: Number and Amount of Abatements Associated With Tax on Original Return by Fiscal Year of Abatement–
Individual Tax Returns
Dollars in Millions Abatement type
Tax Penalty Interest Total
Fiscal year of abatement Number Amount Number Amount Number Amount Number Amount
1995 1,568,051 $2,990 1,416,584 $1,036 1,138,472 $199 4,123,107 $4,226
1996 1,417,480 2,983 1,343,692 921 1,147,064 162 3,908,236 4,066
1997 2,490,285 3,710 1,402,363 932 1,540,613 136 5,433,261 4,778
1998 2,247,338 4,014 1,890,811 1,073 1,629,120 160 5,767,269 5,247
Total 7,723,154 $13,696 6,053,450 $3,963 5,455,269 $657 19,231,873 $18,317
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
Source: GAO compilation of IRS data.
Page 79 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix VII
Abatements of Tax, Penalty, and Interest Assessments Associated With Tax on Original
Return
Table VII.3: Number and Amount of Abatements Associated With Tax on Original Return by Income Level and Fiscal Year of
Abatement–Individual Tax Returns
Dollars in Millions Fiscal year of abatement
Income level reported on 1995 1996 1997 1998 Total
original return Number Amount NumberAmount Number Amount Number Amount Number Amount
Individual nonbusiness
1040A TPI<$25,000 479,996 $94 497,377 $98 817,873 $227 824,288 $290 2,619,534 $708
Non1040A TPI<$25,000 392,182 143 406,915 71 463,456 99 490,487 105 1,753,040 418
TPI $25,000<$50,000 847,430 335 821,056 311 1,374,619 572 1,394,568 609 4,437,673 1,827
TPI $50,000<$100,000 676,169 522 670,788 427 1,167,764 741 1,156,208 687 3,670,929 2,378
TPI $100,000 or more 580,293 1,498 513,593 1,644 535,692 1,772 613,133 2,057 2,242,711 6,971
Subtotal 2,976,070 $2,592 2,909,729 $2,551 4,359,404 $3,411 4,478,684 $3,747 14,723,887 $12,301
a
Individual business
C-TGR < $25,000 197,782 $56 181,239 $56 210,037 $32 254,462 $123 843,520 $266
C-TGR $25,000<$100,000 353,048 248 309,568 174 345,651 150 429,640 208 1,437,907 780
C-TGR $100,000 or more 268,134 441 236,314 496 229,983 401 289,371 450 1,023,802 1,789
F-TGR<$100,000 31,527 15 27,318 12 21,041 11 20,375 9 100,261 47
F-TGR $100,000 or more 39,693 69 33,586 80 26,795 68 24,578 59 124,652 276
Subtotal 890,184 $828 788,025 $818 833,507 $662 1,018,426 $849 3,530,142 $3,157
b
Income level not available 256,853 $805 210,482 $697 240,350 $705 270,159 $651 977,844 $2,858
Total 4,123,107 $4,226 3,908,236 $4,066 5,433,261 $4,778 5,767,269 $5,247 19,231,873 $18,316
Legend
1040A = Nonbusiness returns filed by individuals
TPI = Total positive income (income reported as a positive on tax return tables)
C-TGR = Form 1040 Schedule C (profit or loss from business) total gross receipts
F-TGR = Form 1040 Schedule F (profit or loss from farming) total gross receipts
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
a
Returns with Schedules C or F may be categorized as nonbusiness rather than business if the
reported primary source of income was wages, investments, and other nonbusiness income.
b
Income level was not always available on certain penalties.
Source: GAO compilation of IRS data.
Page 80 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix VII
Abatements of Tax, Penalty, and Interest Assessments Associated With Tax on Original
Return
Table VII.4: Number of Abatements
Associated With Tax on Original Return Fiscal year of abatement
by Tax Year and Fiscal Year of Tax year of return 1995 1996 1997 1998 Total
a
Abatement–Individual Tax Returns Before 1980 2,601 1,269 709 630 5,209
1980-84 69,766 28,878 15,199 12,525 126,368
1985-89 356,621 193,456 128,612 137,329 816,018
1990 145,812 75,507 52,973 54,676 328,968
1991 313,788 111,529 69,530 69,177 564,024
1992 584,699 291,201 120,295 93,487 1,089,682
1993 1,301,600 649,974 307,825 150,126 2,409,525
1994 1,346,786 1,260,282 504,366 301,476 3,412,910
1995 1,434 1,293,844 1,314,666 589,266 3,199,210
b
1996 2,296 2,916,556 1,910,184 4,829,036
b b
1997 2,530 2,445,813 2,448,343
b b b
1998 2,580 2,580
Total 4,123,107 3,908,236 5,433,261 5,767,269 19,231,873
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Totals are based on abatements, not returns.
a
Earliest tax year was 1962.
b
Does not apply.
Source: GAO compilation of IRS data.
Table VII.5: Amount of Abatements
Associated With Tax on Original Return Dollars in Millions Fiscal year of abatement
by Tax Year and Fiscal Year of Tax year of return 1995 1996 1997 1998 Total
a
Abatement–Individual Tax Returns Before 1980 $11 $5 $3 $4 $23
1980-84 140 73 42 40 295
1985-89 713 407 229 176 1,526
1990 436 214 111 71 833
1991 657 380 147 110 1,294
1992 637 707 380 148 1,872
1993 966 688 757 435 2,846
1994 665 938 655 711 2,968
1995 1 652 1,040 681 2,375
b
1996 1 1,414 1,285 2,699
b b
1997 1 1,584 1,585
b b b
1998 1 1
Total $4,226 $4,066 $4,778 $5,247 $18,317
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Totals are based on abatements, not returns.
a
Earliest tax year was 1962.
b
Does not apply.
Source: GAO compilation of IRS data.
Page 81 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix VII
Abatements of Tax, Penalty, and Interest Assessments Associated With Tax on Original
Return
Table VII.6: Distribution of Returns With Abatements Associated With Tax on Original Return by Filing Status and Fiscal Year of
Abatement–Individual Tax Returns
Filing Status
Fiscal year of Number of Married, filing Married, filing Head of Widow(er) with
abatement returns Single jointly separately household dependent child Total
a a a a a a a
1995
a a a a a a a
1996
1997 3,545,398 24.1% 56.6% 3.5% 15.7% 0.1% 100%
1998 3,688,582 27.3 54.1 4.0 14.5 0.1 100
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Percentages may not sum to 100 because of rounding.
a
IRS was unable to reconstruct the filing status data from its historical files within the time frame of our
review.
Source: GAO compilation of IRS data.
Table VII.7: Distribution of Returns With Abatements Associated With Tax on Original Return by Selected Characteristic and
Fiscal Year of Abatement–IndividualTax Returns
Selected characteristic
Fiscal year of Number of Primary taxpayer over Paid preparer on Earned income credit on
abatement returns age 65 original return original return
1995 2,600,897 12.3% 63.7% 3.6%
1996 2,479,891 12.5 62.2 3.9
1997 3,545,398 9.3 54.5 3.8
1998 3,688,582 9.5 57.0 4.3
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Percentages should not be totaled because abatements could occur on returns with more than one
selected characteristic.
Source: GAO compilation of IRS data.
Page 82 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix VII
Abatements of Tax, Penalty, and Interest Assessments Associated With Tax on Original
Return
Table VII.8: Distribution of Number of Abatements Associated With Tax on Original Return by Selected IRS Activity and Fiscal
Year of Abatement–Individual Tax Returns
a
Selected IRS activity
Fiscal year of Number of Audit Offer-in- Criminal
b c d e
abatement abatements indicator compromise Litigation investigation
1995 4,123,107 4.1% 1.6% 4.6% 0.1%
1996 3,908,236 4.4 0.7 2.7 0.1
1997 5,433,261 2.7 0.2 1.3 0.0
1998 5,767,269 2.6 0.1 1.7 0.0
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Percentages should not be totaled because the abatement could have been preceded by more than
one selected IRS activity.
a
IRS activity that occurred before the abatement.
b
Includes audits that are still open and audits closed with a change in tax assessments or no change
in tax assessments.
c
IRS and taxpayer had reached an agreement on the portion of unpaid assessments the taxpayer
would pay.
d
Return was in some phase of the litigation process--open or closed. Would include bankruptcy cases,
and cases settled or closed before trial.
e
IRS investigation of criminal wrongdoing associated with the return. Includes cases open and closed,
including those without further action by IRS.
Source: GAO compilation of IRS data.
Table VII.9: Distribution of Amount of Abatements Associated With Tax on Original Return by Selected IRS Activity and Fiscal
Year of Abatement–Individual Tax Returns
a
Dollars in Millions Selected IRS activity
Fiscal year of Amount of Audit Offer-in- Criminal
b c d e
abatement abatements indicator compromise Litigation investigation
1995 $4,226 15.6% 4.7% 8.7% 0.6%
1996 4,066 19.4 2.4 5.7 0.4
1997 4,778 16.0 0.7 3.1 0.4
1998 5,247 14.8 0.4 3.2 0.2
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Percentages should not be totaled because the abatement could have been preceded by more than
one selected IRS activity.
a
IRS activity that occurred before the abatement.
b
Includes audits that are still open and audits closed with a change in tax assessments or no change
in tax assessments.
c
IRS and taxpayer had reached an agreement on the portion of unpaid assessments the taxpayer
would pay.
d
Return was in some phase of the litigation process--open or closed. Would include bankruptcy cases,
and cases settled or closed before trial.
e
IRS investigation of criminal wrongdoing associated with the return. Includes cases open and closed,
including those without further action by IRS.
Source: GAO compilation of IRS data.
Page 83 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix VIII
Other Types of Abatements Associated With
Unpaid Assessments on Individual and
Business Tax Returns
This appendix provides abatement information on the unpaid balance of
assessments that cannot be identified separately as tax, penalty, or
interest. The information shown in this appendix is not shown or
duplicated in any way in appendixes I through VII.
Table VIII.1: Number and Amount of Other Types of Abatements Associated With Unpaid Assessments–Individual and
Business Tax Returns
Dollars in Millions Fiscal year of abatement
1995 1996 1997 1998 Total
Reason for abatement Number Amount Number Amount Number Amount Number Amount Number Amount
Determined currently not
collectible 484 $6 451 $11 771 $7 903 $4 2,609 $28
Bankruptcy or offer-in-
a
compromise 19,547 446 113,752 1,021 174,867 1,673 191,675 1,697 499,841 4,837
Collection statute expired 243,260 1,848 376,048 2,724 427,843 3,199 745,517 4,833 1,792,668 12,603
b
Trust fund recovery credit 140,189 89 160,052 135 227,385 199 308,237 250 835,863 673
Total 403,480 $2,389 650,303 $3,891 830,866 $5,077 1,246,332 $6,783 3,130,981 $18,140
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income. Business tax returns
include corporate income tax, various employment taxes, and other types of returns on IRS’ business
master file.
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
a
Abatements of unpaid assessments on bankruptcy and offer-in-compromise returns cannot be
separated.
b
The balance due on a business return that results from employers’ not paying IRS withholdings from
employees’ earnings is abated when credit (payment) is recovered through trust fund penalties
assessed on the individual accounts of responsible officers.
Source: GAO compilation of IRS data.
Page 84 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix VIII
Other Types of Abatements Associated With Unpaid Assessments on Individual and Business
Tax Returns
Table VIII.2: Number and Amount of Other Types of Abatements Associated With Unpaid Assessments–Individual Tax Returns
Dollars in Millions Fiscal year of abatement
1995 1996 1997 1998 Total
Reason for abatement Number Amount Number Amount Number Amount Number Amount Number Amount
Determined currently not
collectible 452 $6 400 $11 729 $6 851 $4 2,432 $27
Bankruptcy or offer-in-
a b b b b
compromise 87,770 869 146,128 1,397 164,284 1,521 398,182 3,787
Collection statute expired 45,815 684 132,288 1,315 150,630 1,543 340,643 2,251 669,376 5,792
Total 46,267 $690 220,458 $2,195 297,487 $2,946 505,778 $3,775 1,069,990 $9,606
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Totals are based on abatements, not returns.
a
Abatements of unpaid assessments on bankruptcy and offer-in-compromise returns cannot be
separated.
b
During fiscal year 1996 on individual returns, IRS began abating the balance due rather than specific
assessments on bankruptcy and offer-in-compromise cases as it had done in prior years. Abatements
on these types of cases before this procedural change are included in the appropriate tables in
appendixes I through VII.
Source: GAO compilation of IRS data.
Table VIII.3: Number and Amount of Other Types of Abatements Associated With Unpaid Assessments–Business Tax Returns
Dollars in Millions Fiscal year of abatement
1995 1996 1997 1998 Total
Reason for abatement Number Amount Number Amount Number Amount Number Amount Number Amount
Determined currently not
a a a a a
collectible 32 51 42 52 177
Bankruptcy or offer-in-
b
compromise 19,547 $446 25,982 $152 28,739 $276 27,391 $176 101,659 $1,050
Collection statute expired 197,445 1,164 243,760 1,408 277,213 1,656 404,874 2,582 1,123,292 6,811
c
Trust fund recovery credit 140,189 89 160,052 135 227,385 199 308,237 250 835,863 673
Total 357,213 $1,699 429,845 $1,696 533,379 $2,131 740,554 $3,008 2,060,991 $8,534
Notes: Individual tax returns are Form 1040, Federal Individual Income Tax Returns, including those
with Schedule C, sole proprietor business income and Schedule F, farm income.
Totals are based on abatements, not returns.
Amounts may not sum to totals because of rounding.
a
Less than $1 million.
b
Abatements of unpaid assessments on bankruptcy and offer-in-compromise returns cannot be
separated.
c
The balance due on a business return that results from employers’ not paying IRS withholdings from
employees’ earnings is abated when credit (payment) is recovered through trust fund penalties
assessed on the individual accounts of responsible officers.
Source: GAO compilation of IRS data.
Page 85 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix IX
Comments From the Internal Revenue Service
Page 86 GAO/GGD-99-77 IRS’ Abatement of Assessments
Appendix X
Major Contributors to This Report
Rodney F. Hobbs, Senior Evaluator
General Government Elizabeth W. Scullin, Communications Analyst
Division, Washington,
D.C.
Royce L. Baker, Evaluator-in-Charge
Kansas City Field Thomas N. Bloom, Senior Computer Specialist
Office Julie A. Cahalan, Evaluator
Page 87 GAO/GGD-99-77 IRS’ Abatement of Assessments
Page 88 GAO/GGD-99-77 IRS’ Abatement of Assessments
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Tax Administration: IRS' Abatement of Assessments in Fiscal Years 1995-98
Published by the Government Accountability Office on 1999-06-04.
Below is a raw (and likely hideous) rendition of the original report. (PDF)