IRS collections rose last year

The Internal Revenue Service used more tax liens, individual reviews and corporate audits last year to boost enforcement collections by 22%, an inspector general’s report said.

Corporate examinations rose 4% in fiscal year 2007, reversing an eight-year trend, the report said. Still, the rate of IRS examinations of corporate returns is below the 1998 level.

“The IRS has reversed many of the enforcement declines in both collection and examination functions,” the report by Treasury Inspector General for Tax Administration Russell George said.

“Continued efforts to improve compliance is important to reducing the tax gap and maintaining the integrity of the voluntary tax compliance system.”

The IRS has been strengthening compliance and enforcement efforts in recent years to try to close the estimated $345-billion tax gap. It cut back on those efforts in the 1990s when Congress accused it of using heavy-handed tactics.