IRS Shamed Again On Enforcement Record By New Report

by Leroy Baker, Tax-News.com, New York

03 May 2004

The number of corporate tax returns examined by the Internal Revenue Service has fallen dramatically in the last seven years, a report released last week has revealed, leading to further criticism of the IRS’s record on enforcement issues.

According to the report published by the Treasury Inspector General for Taxation on Thursday, the IRS reviewed one out of every 182 corporate tax returns in 2003, compared to one in 52 in 1997, representing a decline of 67%.

Whilst TIGTA reserved some praise for the agency for improving its overall track record on enforcement since the nadir of the late 1990s, it was noted that this was largely at the expense of audits on relatively low-earning taxpayers on incomes of less than $100,000 per year.

“While some of the stats in the TIGTA report look promising, the results aren’t so shiny when you scratch below the surface,” observed Sen. Max Baucus the ranking Democrat on the Senate Finance Committee, referring to TIGTA’s findings.

He added that it was unacceptable for the IRS to “bolster its audit figures” by targeting individual taxpayers.

“Taxpayers making less than $25,000 a year are more likely to be audited than those making over $100,000” noted Baucus.

"I’m concerned that IRS’s audit priorities are misplaced," he concluded.

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