115 NOTES TO THE FINANCIAL STATEMENTS

Note 17. Collections and Refunds of Federal Revenue

Collections of Federal Tax Revenue for the Year Ended September 30, 2018

Federal Tax Year to Which Collections Relate

Tax

Revenue Prior

(In billions of dollars) Collections 2018 2017 2016 Years

Individual income tax and tax 

withholdings ................................. 3,089.8 1,932.6 1,096.7 33.5 27.0

Corporate income taxes ................. 262.7 150.3 99.7 1.7 11.0

Excise taxes .................................. 98.5 73.3 24.9 0.1 0.2

Unemployment taxes ..................... 43.4 34.1 9.1 0.1 0.1

Customs duties .............................. 43.4 43.4 - - -

Estate and gift taxes ....................... 23.9 0.1 20.9 1.1 1.8

Railroad retirement taxes ................ 6.3 4.9 1.4 - -

Fines, penalties, interest, and other 

revenue ......................................... 7.2 7.1 0.1 - -

Subtotal 3,575.2 2,245.8 1,252.8 36.5 40.1

Less: amounts collected for nonfederal entities ............................... (0.5)

Total............................................ 3,574.7

Treasury is the government’s principal revenue-collecting entity. Collections of individual income and tax withholdings

include FICA/SECA and individual income taxes. These taxes are characterized as non-exchange revenue.

Excise taxes, also characterized as non-exchange revenue, consist of taxes collected for various items, such as airline

tickets, gasoline products, distilled spirits and imported liquor, tobacco, firearms, and others.

Tax and other revenues reported reflect the effects of tax expenditures which are special exclusions, exemptions,

deductions, tax credits, preferential tax rates, and tax deferrals that allow individuals and businesses to reduce taxes they may

otherwise owe. The Congressional Budget Act of 1974 (P.L. 93-344 or Budget Act) requires that a list of tax expenditures be

included in the annual Budget. Tax expenditures may be viewed as alternatives to other policy instruments, such as spending

or regulatory programs. For example, the government supports college attendance through both spending programs and tax

expenditures. The government uses Pell Grants to help low- and moderate-income students afford college and allows certain

funds used to meet college expenses to grow tax free in special college savings accounts.

Tax expenditures include deductions and exclusions which reduce the amount of income subject to tax. Examples are

the deduction for mortgage interest on personal residences and the exclusion of interest on state and local bonds. Tax

expenditures also include tax credits, which reduce tax liability dollar for dollar for the amount of credit. For example, the

child tax credit reduces liability by $2,000 per child for taxpayers eligible to use it fully. Other credits are targeted at business

activity, such as credits for producing electricity from renewable energy or the research and experimentation credit, which

encourages businesses in the U.S. to increase investment in research activities. In addition, tax expenditures include some

provisions that allow taxpayers to defer tax liability. Examples include provisions that allow immediate expensing or

accelerated depreciation of certain capital investments, and others that allow taxpayers to defer their tax liability, such as the

deferral of recognition of income on contributions to and income accrued within qualified retirement plans.

The Total Revenues reported in the Statement of Operations and Changes in Net Position and the related information

reported in this note, do not include explicit line items for tax expenditures, but the total revenue amounts and budget results

reflect the effect of these expenditures. Tax expenditures are discussed in this note, the unaudited MD&A, and in the

unaudited Other Information section of the Financial Report.

 
NOTES TO THE FINANCIAL STATEMENTS 116

Federal Tax Refunds Disbursed for the Year Ended September 30, 2018

Tax Year to Which Refunds Relate

Refunds Prior

(In billions of dollars) Disbursed 2018 2017 2016 Years

Individual income tax and tax 

withholdings .......................................... 401.4 54.4 307.9 29.8 9.3

Corporate income taxes.......................... 60.1 4.8 25.9 9.2 20.2

Excise taxes .......................................... 1.6 0.5 0.6 0.1 0.4

Unemployment taxes.............................. 0.1 - 0.1 - -

Customs duties ...................................... 1.9 1.1 0.3 0.2 0.3

Estate and gift taxes ............................... 1.0 - 0.3 0.4 0.3

Total ................................................... 466.1 60.8 335.1 39.7 30.5

Reconciliation of Revenue to Tax Collections for the Year

Ended September 30, 2018, and 2017

(In billions of dollars) 2018 2017

Consolidated revenue per the Statement of Operations and Changes in Net 

Position ............................................................................................................ 3,384.3 3,374.6

Tax refunds ....................................................................................................... 466.1 439.1

Earned income tax and child tax credit imputed revenue ...................................... (77.2) (79.1)

Other tax credits and accrual adjustments ........................................................... (56.8) (49.0)

Federal Insurance Contributions Act - Tax ........................................................... 22.7 21.9

Federal Reserve earnings .................................................................................. (70.8) (81.3)

Nontax-related fines and penalties reported by entities......................................... (79.8) (78.4)

Nontax-related earned revenue........................................................................... (13.8) (28.4)

Collections of federal tax revenue ....................................................................... 3,574.7 3,519.4

Consolidated revenue in the Statement of Operations and Changes in Net Position is presented on a modified cash basis,

net of tax refunds, and includes other non-tax related revenue. Earned Income Tax Credit, Child Tax Credit, and other tax

credits amounts (unaudited) are included in gross cost in the Statements of Net Cost. The FICA – Tax paid by federal

agencies is included in the Individual income and tax withholdings line in the Collections of federal tax revenue; however, it

is not reported on the Statement of Operations and Changes in Net Position as these collections are intragovernmental

revenue and eliminated in consolidation. The table above reconciles total revenue to federal tax collections.
117 NOTES TO THE FINANCIAL STATEMENTS

Collections of Federal Revenue for the Year Ended September 30, 2017

Federal Tax Year to Which Collections Relate

Tax

Revenue Prior

(In billions of dollars) Collections 2017 2016 2015 Years

Individual income tax and tax 

withholdings ..................................... 2,976.3 1,930.0 988.6 32.3 25.4

Corporate income taxes ...................... 338.6 218.6 108.9 1.8 9.3

Excise taxes ....................................... 89.4 66.7 22.5 - 0.2

Unemployment taxes .......................... 44.2 31.4 12.7 - 0.1

Customs duties................................... 34.9 34.9 - - -

Estate and gift taxes ........................... 23.8 0.2 20.9 1.0 1.7

Railroad retirement taxes .................... 6.0 4.6 1.4 - -

Fines, penalties, interest and other 

revenue ............................................. 6.6 6.5 0.1 - -

Subtotal........................................... 3,519.8 2,292.9 1,155.1 35.1 36.7

Less: amounts collected for nonfederal entities .................................... (0.4)

Total................................................ 3,519.4

Federal Tax Refunds Disbursed for the Year Ended September 30, 2017

Tax Year to Which Refunds Relate

Refunds Prior

(In billions of dollars) Disbursed 2017 2016 2015 Years

Individual income tax and tax 

withholdings ....................................... 389.2 46.3 306.4 27.8 8.7

Corporate income taxes ........................ 44.9 5.2 14.4 7.8 17.5

Excise taxes ......................................... 2.1 0.4 1.0 0.2 0.5

Unemployment taxes ............................ 0.1 - 0.1 - -

Customs duties..................................... 1.7 1.1 0.3 0.1 0.2

Estate and gift taxes ............................. 1.1 - 0.2 0.4 0.5

Total.................................................. 439.1 53.0 322.4 36.3 27.4