Watchdog group cites decline in tax audits of largest corporations

WASHINGTON (AP) The Internal Revenue Service is auditing a smaller percentage of the nation's largest corporations and spending less time on each audit, a private watchdog group reported Wednesday.

Wednesday, December 20th 2006, 2:09 pm

By: News On 6

WASHINGTON (AP) The Internal Revenue Service is auditing a smaller percentage of the nation's largest corporations and spending less time on each audit, a private watchdog group reported Wednesday.

The conclusions were based on an analysis of IRS data released under the Freedom of Information Act to the Transactional Records Access Clearinghouse, an organization based at Syracuse University that monitors federal spending and enforcement activities.

The IRS responded that tax revenues from audits were going up and the decline in hours spent on each case was a result of more efficient operations.

TRAC noted that the IRS examined the returns of 35.3 percent of companies with assets of $250 million or more in fiscal year 2006, down from 44.1 percent in 2005 and compared to 34.4 percent in 2002.

It also said that hours per audit declined from 1,210 in 2002 to an estimated 958 in 2006.

The organization said that while these corporations filed only 0.2 percent of all corporate returns, they controlled 90 percent of corporate assets and received 87 percent of all corporate income.

The organization acknowledged that enforcement revenues were up, but said that could be attributed to ``a real increase in the number of noncompliant taxpayers.''

The IRS says that $48.7 billion in enforcement revenue was collected in fiscal 2006, up from $47.3 billion the previous year.

IRS spokesman Terry Lemons said the agency strongly disagreed with TRAC's conclusion that the biggest corporations were getting off easy. ``Large corporations are not getting easier treatment,'' he said. ``They are hearing more often from us and getting bigger tax bills.''

He said that, between 2002 and 2006, the recommended levy per return for audits of corporations with assets of $250 million and up had gone from $3.65 million to just under $6 million.