Tax Audits: IRS Gives Big Corporations a Pass

Big corporations still get away with it. A stunning new analysis by the Transactional Records Access Clearinghouse [1] (TRAC) at Syracuse University shows how the IRS targets smaller corporations, while larger corporations that would yield more unpaid tax dollars go unaudited.

It’s worth reading the whole thing, [1] but I share some highlights:

1. Among corporations with assets over $250 million, the IRS reduced the number of audits by 22 percent and the number of hours spent auditing by 33 percent between 2005 and 2009. In an era of high deficits and higher concern over corporate malfeasance, there are no excuses. Congress even increased the number of full time auditors available for such work by 6 percent.

Audit hours, change for large corporations
between FY 2005 and FY 2009

2. While the time spent auditing large corporations dropped a third, time spent auditing small and midsized corporations increased. Hours went up 30 percent for small and 13 percent for midsized tax audits.

Changes in IRS revenue agent
hours between FY 2005 and FY 2009

3. Unsurprisingly, audits of smaller corporations reveal less unpaid revenue for the work. Misreported tax dollars among the giants came to $9,354 per auditor hour, eight times higher than uncovered for the small and mid-size firms.

Like so many other things, the trend might be reversed by the Obama administration. But time is running out. Tax day presents yet another chance for the Obama team to show which side it’s on. This isn’t even about closing loopholes, just enforcing existing law. What are they waiting for?