Tuesday, June 23, 2009

This is the continuation (PART 2) of an article posted on 3 June 2009... ... c. To insure that SARS complies with its duties as carefully spelt ou

USA: TAX AUDITS OF LARGE CORPORATES ON THE DECLINE? Fewer large corporations are getting audited. Instead, the Internal Revenue Service is cracking down on smaller corporations, particularly for those with $50 million or less in assets. While big corporations are getting away with, audit rates for smaller corporations is up, allowing the IRS to claim that audits for all corporations is increasing.

The findings, contained in the latest data from the Transactional Records Access Clearinghouse (TRAC), makes disturbing reading. Tax audit rates of the largest companies are less than half what they were 20 years ago with the number of field audits and auditor hours aimed at the large corporations down 30 per cent and the total of additional taxes these entities are found to owe the government falling 20 per cent.

The IRS is focusing on smaller corporations, because it takes less time. So by implication, it would be more cost efficient. But a closer look at the numbers tells the opposite.

According to Traclinks, each revenue agent hour spent auditing the smallest corporations delivered an extra $682 in additional recommended taxes. By way of contrast, every revenue hour auditing corporations with more than $250 million in assets delivered $7,498 in additional taxes.

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