About the Data
Internal Revenue Service AIMS History
This is a description of the AIMS system prior to 2001. (For a description of the current AIMS which reflects the recent re-organization of IRS following the Restructuring and Reform Act of 1998, see current page.)
The Internal Revenue Service maintains an internal management database to track tax audits called the Audit Information Management System or AIMS. In general terms, each of the IRS District Offices furnishes information via the Service Centers to the Detroit Computing Center which maintains the database. This database is used to monitor examination workload and track results.
The year indicated is the fiscal year the audit was completed. Fiscal years cover October 1 through September 30. Thus, fiscal year 1996 covers audits completed from October 1, 1995 through September 30, 1996. There is usually some delay between when taxpayers file their returns, and an IRS audit takes place. Thus fiscal year 1996 audits may cover returns filed in a preceding year. Generally, returns can be audited for up to three years following filing. Longer periods may apply in the case of fraud or substantial misstatements on the return.
This audit series includes all reported IRS district examinations of federal income tax returns filed by individuals and corporations. Only IRS district audits are included. Both audits conducted by district tax auditors, as well as by more experienced revenue agents are covered. District tax audits are typically the traditional face-to-face audits where taxpayers are asked to appear at an IRS office to answer questions about their return (typically conducted by tax auditors), or an IRS employee (typically a revenue agent) visits taxpayers at their home or office. It does not include correspondence audits originating from IRS Service Centers.
Information is provided on audits in each of the current 33 IRS districts. Prior to 1996, IRS was organized into 63 districts. However, the data have been consolidated to current IRS district boundaries so that consistent comparisons can be made across time. Note that audits conducted by the IRS international office are not included.
The IRS divides federal income tax returns filed by individuals into examination classes, based upon the type and level of income. What IRS refers to as "nonbusiness" returns are divided on the basis of the amount of total positive income (TPI) -- the sum of the positive income items reported. Excluded from the category of "nonbusiness" returns are taxpayers who report that a substantial source of income came from the conduct of an unincorporated business (reported on a Schedule C) or farm (reported on a Schedule F). IRS refers to these as "business" returns and categorizes them by their level of total gross receipts (TGR). Corporate returns are divided into examination classes by asset size.
The IRS selects returns for audit for a variety of reasons. The specific reason each return is selected for audit is recorded in the AIMS database, and make-up an important element in assessing IRS examination practices and results.
In addition to data on the district, year, auditor, type and income level, and audit selection reason, information about the audit itself is recorded. Five basic categories of information are available:
Care should be taken in interpreting figures on additional taxes and penalties. These are auditor recommendations, not final assessments. These amounts are often substantially reduced or even eliminated following taxpayers' administrative and/or court appeals. (See more info.)
- number of audits
- number of no change audits (audits where no correction to tax liability is made)
- hours of auditor time
- hours of auditor time spent on no change audits
- total recommended additional taxes and penalties
Very little is definitively known about the overall reliability and validity of AIMS data. This is the central data source IRS uses internally for management purposes. It is also the primary source IRS uses for reporting to Congress and the public on its audit activities.