New Data Suggests Fall In IRS Business Audits

by Mike Godfrey, Tax-News.com, Washington

03 November 2004

Data released this week by an independent watchdog suggests that the number of business audits undertaken by the US Internal Revenue Service in 2004 has fallen compared to the number of audits in 2003.

Comparing figures for the first half of fiscal 2004 against data for half of last year's totals, the Transactional Records Access Clearinghouse (TRAC) at Syracuse University concluded that the number of audits in 2004 is down 26%, and the amount of extra tax demanded was down 36% to $4.3 billion.

Moreover, whilst the audit rate of large US businesses (those with assets of $100 million or more), has held steady, the TRAC report found that the number of hours devoted to such audits has dropped considerably.

However, IRS spokesman Terry Lemons disputed the TRAC findings, arguing that comparing half of this year’s data against half of last year’s is not comparing like with like.

"You can't simply take the numbers and double them," Lemons observed.

"We have a lot of audits that closed in the third and fourth quarter," he noted, adding that the agency is expecting a record $40 billion in enforcement collections in 2004.

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