IRS Enforcement by the Numbers: What Public Data Shows About Audits, Liens, and Settlements

The Internal Revenue Service (IRS) publishes statistics, data, and other information each year, yet many taxpayers continue to rely on myths and assumptions when it comes to vital financial prospects such as: audits, tax liens, payment plans, and other enforcement actions. Questions like, “What are my chances of being audited?”, “How often does the IRS accept an Offer in Compromise?”, and “How many tax liens does the agency actually file each year?” are common concerns amongst taxpayers, yet the definitive answers are routinely based on speculation or hearsay rather than concrete and sourced evidence. 

Fortunately, the IRS releases extensive public data through sources such as the IRS Data Book and Statistics of Income reports which provides an objective look at how the agency administers and enforces the nation's tax laws. In an effort to help taxpayers get to the bottom of common concerns, Clarity Tax Relief has conducted a number of original studies based on the IRS data to answer the questions taxpayers ask most often and provide greater context for what the numbers actually reveal.

How likely are you to be audited?

Most taxpayers are unlikely to face an IRS audit. Recent IRS data analyzed by Clarity Tax Relief shows that fewer than one-half of one percent of individual income tax returns are audited each year, although audit rates increase substantially for high-income taxpayers and certain complex returns.

According to the data, the overall individual audit rate is approximately 0.4%, meaning roughly 4 out of every 1,000 individual tax returns are examined. Most of these audits are conducted through correspondence by mail rather than an in-person examination.

Income is one of the strongest predictors of audit risk and breaks down as follows:

How often does the IRS accept an Offer in Compromise?

On average, 1 in 5 Offers in Compromise (or 20%) are accepted by the IRS in FY2024, according to this data. The Offer in Compromise program provides an opportunity for qualifying taxpayers to essentially settle their tax debt for less than the full amount originally owed, however most applications are ultimately rejected because applicants do not meet the IRS's financial or procedural requirements.

The IRS evaluates each application by reviewing the taxpayer's income, expenses, assets, equity, and future ability to pay. Applications that are rejected can be done so on grounds of the following:

• Taxpayer has sufficient ability to pay
• Taxpayer fails to provide all required documentation
• Taxpayer does not meet filing or payment compliance requirements
• Offer in Compromise submitted is lower than the IRS’s calculated reasonable collection potential

While the overall acceptance for OIC’s seems disheartening at first glance, thousands of taxpayers successfully resolve their tax debt through the program each year. Acceptance depends on a number of varying factors so those who accurately document their financial condition and meet the IRS's eligibility requirements generally have a stronger chance of approval.

How many federal tax liens does the IRS file each year?

The IRS filed 214,099 Notices of Federal Tax Lien in fiscal year 2025, an increase of approximately 8.7% from the previous fiscal year according to the information released by the IRS. This trend of increased federal tax liens has increased for the last three years. A federal tax lien does not mean the IRS has seized a taxpayer's property, however it establishes the government's legal claim against a taxpayer's assets after an unpaid tax debt remains unresolved. The recent increase in lien filings suggests the IRS has continued to expand its collection enforcement efforts as operations have returned to normal following the pandemic.

How often does the IRS levy taxpayers?

The IRS issued more than 500,000 levies in fiscal year 2025, according to public IRS data. Levies are the IRS’s most powerful collection tool, but levies are issued far less often than collection notices and installment agreements and usually only are issued after the taxpayer has failed to respond to multiple IRS notices or make arrangements to resolve an outstanding tax debt. A levy allows the IRS to legally seize wages, bank account funds, tax refunds, or other assets to satisfy unpaid taxes, making it one of the final stages of the collection process.

Not every unpaid tax balance results in a levy. Before taking levy action, the IRS is generally required to send a series of collection notices, issue a Final Notice of Intent to Levy and Notice of Your Right to a Hearing, and provide the taxpayer an opportunity to appeal or resolve the debt. Many levies can be avoided by paying the balance in full, establishing an installment agreement, submitting an Offer in Compromise, or otherwise working with the IRS before enforcement reaches the levy stage.

How many taxpayers enter installment agreements?

More than 3 million new installment agreements are established with the IRS each year, according to public IRS data. According to this study from Clarity Tax Relief, structured payment plans remain the agency's most frequently utilized tax resolution method. The consistently high volume of new installment agreements demonstrates that the IRS generally prefers working with taxpayers to collect outstanding balances through structured payments rather than immediately pursuing more aggressive collection actions.

How often does the IRS remove penalties?

The IRS grants hundreds of thousands of penalty abatements each year, which the Data Book shows amounts to billions of dollars in civil penalties abated each fiscal year against tens of billions formally assessed. While many taxpayers assume IRS penalties are permanent, the data shows that penalty relief is a routine part of tax administration for taxpayers who qualify. Whether based on reasonable cause, administrative relief, or the First Time Abate (FTA) policy, penalty abatement provides an opportunity to reduce or eliminate certain IRS penalties when eligibility requirements are met.

Taxpayers requesting to have a penalty abatement break down as follows:

1. Identify the penalty. Review your IRS notice or account transcript to determine which penalty has been assessed.
2. Determine your eligibility. Identify whether you qualify for First Time Abate (FTA), Reasonable Cause Relief, an Administrative Waiver, or a Statutory Exception.
3. Become compliant. File all required tax returns and pay the tax owed or establish an approved IRS payment plan if you cannot pay the balance in full.
4. Gather supporting documentation. Collect any records, correspondence, or other documentation needed to support your request for penalty relief.
5. Submit a penalty abatement request. Contact the IRS or submit the appropriate forms and supporting documentation to request that the penalty be reduced or removed.
6. Respond to any IRS follow-up requests. If the IRS requests additional information while reviewing your request, provide it promptly to avoid delays.
7. Review the IRS's decision. Carefully read the determination. If your request is denied, you may be able to submit additional information or pursue an appeal, depending on the circumstances.

How much unpaid tax debt does the IRS have outstanding?

The IRS was owed roughly $740 billion in unpaid assessed tax debt at the end of fiscal year 2025, according to public IRS data. The figure represents hundreds of billions of dollars in outstanding federal tax liabilities owed by individuals and businesses and illustrates the significant challenge the IRS faces in collecting delinquent taxes. While this balance may appear overwhelming, much of it is tied to taxpayers who are making payments through installment agreements, experiencing financial hardship, or whose debts are unlikely to be fully collectible.

How difficult is it to reach the IRS by phone?

IRS customer service representatives answered approximately one-third of taxpayer calls in fiscal year 2025, with call and wait times worsening in 2026. While telephone service has improved compared to some recent filing seasons, millions of callers still experience long hold times, disconnected calls, or are unable to reach a live representative. The data illustrates that contacting the IRS by phone often requires persistence, especially during the peak tax filing season.

Clarity Tax Relief has found that the best chance of reaching a live agent comes from calling at exactly 7 a.m. local time on either Tuesday, Wednesday, or Thursday. The phone number is 800-829-1040. Online resources tend to be a better resource for taxpayers especially for balance, transcript, and payment-plan related tasks. 

How many CP2000 notices are issued each year?

The IRS Automated Underreporter (AUR) program resolved nearly 1 million cases during fiscal year 2025, according to the agency’s public reports. By cross-referencing information from third-party sources (such as financial institutions and employers) against individual filings, the agency identified and assessed roughly $5.9 billion in additional taxes and interest. While the IRS does not explicitly disclose the total volume of CP2000 notices mailed, these proposals for return adjustments serve as the primary catalyst for almost every case closed through the AUR process.

Some of the most common issues that trigger a CP2000 notice include:

• Unreported wage income from a Form W-2.
• Missing income reported on Forms 1099-NEC, 1099-MISC, or 1099-K.
• Interest or dividend income omitted from the tax return.
• Stock sales reported without the taxpayer's cost basis.
• Retirement distributions or investment income that was not reported.
• Differences between reported tax credits, deductions, or withholding amounts and IRS records.

Many CP2000 notices result from reporting errors or incomplete information rather than intentional underreporting.

Receiving a CP2000 notice does not automatically mean the IRS is correct. Taxpayers should carefully review the proposed changes and compare them with their own records before responding. The notice provides an opportunity to agree, partially agree, or disagree with the proposed adjustment by the response deadline. Supporting documentation should be included whenever the taxpayer believes the IRS's proposed changes are incorrect. Ignoring the notice may result in the IRS assessing the proposed tax, penalties, and interest without further input from the taxpayer.

How often does the IRS pursue criminal investigations?

The IRS initiated approximately 2,667 criminal investigations in fiscal year 2025, according to public IRS data. While criminal tax enforcement receives significant media attention, it represents only a tiny fraction of the millions of tax returns the IRS processes each year (160 million individual returns filed). That means there is fewer than one case per 50,000 returns and according to Clarity Tax Relief’s analysis of the IRS data, nearly all of these cases are due to willful fraud. Most tax compliance issues are resolved through the agency's civil examination and collection processes rather than through criminal prosecution. Criminal investigations are generally reserved for cases involving willful tax evasion, fraud, money laundering, or other serious financial crimes.

IRS Criminal Investigation typically focuses on cases involving willful misconduct rather than honest mistakes or mathematical errors. Common examples include:

• Tax evasion and deliberate underreporting of income.
• Filing false or fraudulent tax returns.
• Payroll tax fraud.
• Identity theft and tax refund fraud.
• Money laundering and financial crimes.
• Cryptocurrency-related tax fraud.
• Organized tax fraud schemes and abusive tax shelters.

Most taxpayers who make filing errors, miss payments, or owe back taxes will never become the subject of a criminal investigation. Those issues are generally handled through the IRS's civil compliance programs.

How frequently are large corporations audited?

The IRS announced a target audit rate of 22.6% for corporations with assets of $250 million or more, while small C corporations with assets under $10 million were audited at well under 1%.The elevated audit rate reflects the complexity of large corporate tax returns and the substantial tax revenue associated with these businesses.

The IRS uses a combination of data analytics, risk assessment models, and examiner reviews to identify corporate returns with a higher likelihood of errors or noncompliance. Factors that may increase the likelihood of examination include:

• Large or unusual deductions or credits.
• Significant changes in taxable income from prior years.
• Complex domestic or international transactions.
• Transfer pricing issues involving related entities.
• Industry-specific compliance risks.
• Information identified during previous examinations.

The IRS also conducts compliance campaigns that focus on emerging tax issues or industries where examination data indicates a higher risk of underreporting.

Why do EITC recipients face higher audit rates?

Taxpayers who claim the Earned Income Tax Credit (EITC) are audited at significantly higher rates than many higher-income taxpayers. Although the EITC is intended to provide financial assistance to low- and moderate-income working families, it has historically experienced one of the highest audit rates among individual tax provisions due to the complexity of its eligibility rules and the relatively high rate of improper claims.

Most EITC examinations are correspondence audits, meaning the IRS requests documentation through the mail rather than conducting an in-person examination. Taxpayers may be asked to provide records that verify:

• A qualifying child's residency.
• The relationship between the taxpayer and the child.
• Earned income reported on the return.
• Filing status.
• Eligibility for the credit under IRS rules.

Because these audits are generally limited to verifying specific eligibility requirements, they are typically less complex than field examinations conducted at a taxpayer's home or place of business.

Conclusion

The IRS publishes an extraordinary amount of information about its enforcement activities each year, yet many taxpayers remain unaware of what the data actually reveals. From audit rates and installment agreements to federal tax liens, penalty abatements, and criminal investigations, the numbers paint a more balanced picture than many common misconceptions suggest. While millions of taxpayers successfully resolve tax issues through payment plans, penalty relief, or other administrative programs, the data also highlights the importance of responding promptly to IRS notices before collection actions escalate. Understanding these trends allows taxpayers to make more informed decisions and approach IRS correspondence with greater confidence rather than uncertainty.

It's equally important to remember that IRS statistics tell only part of the story. Every taxpayer's situation is unique, and outcomes depend on factors such as the amount owed, filing history, financial circumstances, and eligibility for specific relief programs. Whether someone is responding to a CP2000 notice, requesting penalty abatement, applying for an Offer in Compromise, or establishing an installment agreement, taking the time to understand available options can often lead to a more favorable resolution than ignoring the issue. Public IRS data provides valuable context, but individualized analysis remains essential when evaluating the best course of action.

For taxpayers facing complex or confusing IRS matters, professional guidance can help simplify the process. Clarity Tax Relief assists individuals and businesses nationwide with resolving tax debts, responding to IRS notices, negotiating payment arrangements, requesting penalty relief, and evaluating settlement options such as Offers in Compromise. Consistent with its commitment to transparency, the firm is one of the few in the tax resolution industry to publicly publish its fees: investigations are offered at a flat $495 for personal cases and $945 for business cases, and any recommended resolution work is quoted in writing before a client pays. In addition to its tax resolution services, Clarity Tax Relief maintains a free public library of IRS guides, calculators, notice explanations, transcript code resources, and 25 original studies built from publicly available IRS data, helping taxpayers replace uncertainty with reliable information while recognizing that every tax case is unique and results depend on each individual's circumstances.