The IRS Amasses a Record-Breaking $4.9 Trillion in Total Tax Revenue in Fiscal Year 2022

By Better Today On Jan 4, 2024

TL/DR –

The IRS collected a record $4.9 trillion in tax revenue in fiscal year 2022, approximately $790 billion more than the previous year, according to a report from the Treasury Inspector General for Tax Administration. The report indicates that revenue from field collection increased 37% compared with 2019, attributed in part to focusing on high-earning individuals and large businesses. However, the report also highlighted a declining trend in the number of examinations, which likely contributes to the tax gap—the difference between estimated true tax liability and the amount paid on time—which was estimated to be $688 billion for the tax year 2021.

IRS Shatters Single-Year Tax Revenue Record in Fiscal Year 2022

The IRS has collected an all-time high of $4.9 trillion in tax revenue for the fiscal year 2022, according to the Treasury Inspector General for Tax Administration (TIGTA) report on IRS compliance activities. This represents a $790 billion increase in total revenue compared to FY 2021.

During this period, more than 161 million individual and 12 million business income tax returns were filed. The IRS also processed over 31 million employment tax returns, over 1 million excise tax forms, and over 297,000 estate and gift tax forms. Income taxes collected from individuals saw a surge of 47% or almost $1 trillion since FY 2019.

IRS enforcement revenue for FY 2022 totaled $72 billion, slightly below the FY 2021 record of $75 billion. This revenue has notably increased since FY 2013, when it never exceeded $59 billion.

Automated collection processes were a key factor in the increased revenue, accounting for 74% of enforcement revenue collected in FY 2022. Despite a slight decline in staffing, which led to fewer examinations, the IRS saw a 37% increase in field collection revenue compared to FY 2019. This rise is partly attributed to a focus on high-dollar employment tax cases and individual taxpayers with balances exceeding $1 million.

Looking forward, the IRS plans to target high-income individuals and complex business cases using funds from the Inflation Reduction Act of 2022. However, the agency estimates the 2021 gross tax gap, the difference between true tax liability and the amount paid on time, at $688 billion.

The total number of IRS examinations has declined, but proposed additional taxes after examinations have risen from $17.3 billion in FY 2019 to $30.2 billion in FY 2022. This decline in examinations could potentially widen the overall tax gap as higher-risk taxpayers are less likely to be audited.