LOCAL ECONOMIC SNAPSHOT | TAX DAY PRIMER

Federal revenue collection is big business

By PAMELA YIP
Personal Finance Writer pyip@dallasnews.com

By TOM SETZER
Staff Artist tsetzer@dallasnews.com

Tax revenue collected by the IRS has grown steadily for the past 50 years. Individuals paid 82 percent of taxes and businesses accounted for 17 percent in 2012. About 81 percent of taxes were paid electronically.

Growth in income taxes

Total income taxes collected has grown from $67 billion in 1960 to $1.67 trillion in 2012, most of it from individuals.
(In trillions of dollars) $2

2012 tax collections

$1.5

$1

Almost 85% of all taxes collected last year by the IRS came from individuals.
(Net collections after refunds)

Business tax, $300 billion 16.8%

Estates and trusts, $20 billion 1.2%

Estate and trust income taxes Business income taxes

TOTAL: $1.67 trillion

$0.5

Individuals, $1.37 trillion 82%

Individual income taxes

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

Top tax-paying states for 2012

1. California $249.3 billion 10. Minnesota $61.7 billion

5. Illinois $103.7 billion

2. New York $176.9 billion

9. Massachusetts $73.2 billion

6. Ohio $95.7 billion 8. New Jersey $92 billion 7. Pennsylvania $94.7 billion

The most populous states pay the most individual income taxes, with Texas ranking third.

3. Texas $171.9 billion

4. Florida $113.2 billion

2012 by the numbers

Individual returns processed

Who got audited in 2012

Higher-income individuals are targeted for most examinations or IRS audits.
(Percentage audited) 40

237 million
Percentage filed electronically

81%
Total refunds paid

$373 billion
Total federal revenue collected

30

27.4%

$2.5 trillion Returns from Texans

In 2012: Individual income Corporate S corporations Partnership
SOURCES: IRS; ESRI

20

17.9%

10 2.67% 0
None

8.9% 1.05% 0.7%

$25.1K to $50K $50.1K to $75K

11,292,464 172,875 264,403 331,540

0.64%

0.64%
$75.1K to $100K

0.85%

1.96%
$200.1K to $500K

3.57%
$1.1 million to $5 million More than $10 million

(Income Up ranges) to $25K

$100.1K to $200K

$500.1K to $1 million

$5.1 million to $10 million

The bottom line

Audits would go up more on those with higher incomes because thats where a tax adjustment is likely to have a higher impact. They typically have things that prompt an audit, but were seeing a lot more audit activity just in general than weve seen in a number of years. High-income returns are often more complex, and generally, upper-income taxpayers have resources to engage in pass-through entities, such as partnerships, trusts and corporations. The IRS will sustain its focus on taxpayer populations where complexity creates opportunities for noncompliance. Clay Sanford, IRS spokesman Electronic filing of tax returns continues to rise. If youre not ready to file your tax return by now, consider filing for an extension, which will give you until Oct. 15 to submit the return. You file for an extension on IRS form 4868. Remember, an extension of time to file is not an extension of time to pay. Pamela Yip, personal finance writer, The Dallas Morning News

Ken Sibley, partner, CliftonLarsonAllen LLP