|
Wednesday, December 20, 2006
Corporate Tax Audits Down, TRAC Reports
Syracuse University's TRAC has finally obtained data from the IRS on auditing trends regarding large corporations. Unsurprisingly, the released data shows that the annual audit rate for large corporations has declined this last year.
IRS audited 35.3 percent of all corporations with assets of $250 million or more, down from 44.1 percent last year. The projected rate of hours of work spent per audit also fell from 978 hours/audit to 958.
These releases, compelled by a court order, complicate the picture of IRS enforcement Commissioner Mark Everson presented in November. He announced then that IRS auditing activities had netted more money this year, claiming that " ... no matter how you look at our results, they show a strong rebound in our enforcement efforts."
Everson was right that the IRS brought in more money. But given that enforcement decreased, TRAC speculates that the IRS isn't responsible for the revenue increase (emph. mine).
Some economists and tax experts believe that other explanations are possible, namely that a massive surge in non-compliance is believed to have swept through corporate America. Although government enforcement activities can be measured, accurately tracking the number individuals or corporations who secretly decide to break the law is extremely difficult. In recent years, however, Commissioner Everson, his immediate predecessor and many others have argued that case-by-case evidence strongly suggests more and more corporations are skirting the law. The bottom line: a real increase in the number of non-compliant taxpayers may explain the increase in enforcement revenues.
In other words, there probably was a much bigger bang for the auditing buck this year. So why do less of it?
Posted by Matt Lewis
|