IRS Audits of Business Taxes: Trend is Down
As a business owner, you’ve got a lot to keep track off. The issues may include competitive challenges, employee matters and many more.
And of course tax compliance issues. It’s important to be aware of what the trends are there – and here’s one: a decline in business tax audits.
In simple terms, business tax audits have declined because the IRS has experienced significant budget cuts from Congress in recent years.
How significant have those cuts been?
A recent analysis by the Transactional Records Access Clearinghouse (TRAC) at Syracuse University sheds light on this question.
TRAC found, for example, that audits of the largest corporations (with assets of $20 billion or more) through February of this year are down more than 20 percent compared to the same time a year ago.
The downward trend isn’t quite as large at smaller corporations. But the trend was downward for those companies as well.
The TRAC analysis looked at records from the IRS fiscal years 2010 to 2015. The analysis found that the number of hours put in by revenue agents to examine tax returns for corporations with assets of $250 million or more went down by 34 percent in that period.
The loss of revenue that would otherwise have been collected was far greater than that. In other words, cuts to the IRS budget are penny wise and pound foolish.
To be sure, tax audits can of business still happen. But they don’t happen as often as they did only a few years ago
