Using IRS tax stats

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Few tax practitioners are taking advantage of the IRS tax statistics page. For the site, CLICK HERE.

The welcome to the page says you “find a wide range of tables, articles, and data that describe and measure elements of the US tax system.” So how do practitioners use the site and why?

The statistics provide a wide range of information sorted by tax return type, industry sector and size. Statistical presentations can tell you the most common tax form type field and allow practitioners to compare their clients’ returns to industry statistical averages for similar return types.

Tables by industry sector get as detailed as providing average sales and deductions by line item. The IRS has been known to run returns against industry averages to look for outlier numbers that might be a flag for an audit.

I once worked with a photographer who only took credit card payments. She required all her clients to pay electronically up front for their sessions. Statistically, though, others of similar size in her industry were taking cash payments as well; she was audited as the IRS believed she was omitting the cash receipts from her return.

While we wouldn’t have filed her return any differently, we could have helped her be more prepared for an audit, knowing that her return had some outlier information.

This information can also help when taxpayers are asking questions like is my rent or payroll too high compared to my income? Or, am I paying too much in interest? Tax preparer CPAs tend to ask all sorts of financial planning-type questions during the tax preparation process.

This site might be one tool you could easily point your clients to if they wanted to see how their business measures up compared to others of similar size in their industry.

Summary articles are also presented on the website, where you can find information such as rental income partnerships had the largest profit decrease in 2020 over any other partnership industry sector. The vast array of statistical analysis is not only free but an invaluable tool to make clients aware of when they are in need. 

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