The Internal Revenue Service is planning an 18 percent reduction in its audits of large businesses in the current fiscal year, according to a new report.
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The IRS document also projects a 14 percent drop for the year ending September 30 in the available time for the specialized revenue agents required to conduct such audits compared to two years ago.
Other data from the IRS indicates a smaller decline in the audit rate for individual taxpayers. Tax audit rates for individual taxpayers fell by 5.3 percent in fiscal 2012, but because the number of returns filed had increased, the chances of audits fell at an even faster pace, by 7 percent.
None of these downward trends take into account the expected impact of sequestration cuts, TRAC noted.
The IRS responded to the TRAC report by noting that it reviews both individual and corporate tax returns in a balanced way. "The IRS is committed to running a balanced enforcement program that delivers appropriate levels of review to individual and corporate tax returns," said a statement forwarded by IRS spokesman Anthony Burke. "Our audits of large corporate tax returns remain at high levels by historical standards. In fiscal 2012, we audited more than 10,700 returns of large corporations representing more than 17 percent of businesses in this category. The IRS will remain focused on this area in 2013 during a challenging budget period. The IRS budget has been reduced by around $1 billion since 2010. That represents an almost 8 percent cut in our budget, even as we are aggressively pursuing and dedicating staff to priority issues such as identity theft. We have seen a reduction in the total number of full-time permanent IRS employees by almost 7,000 between the end of 2010 and 2012. And staffing for key enforcement occupations fell nearly 6 percent in the past year."
