IRS cuts back on audits for large corporations

IRS cuts back on audits of large companies

The IRS audit rate for the nation's large corporations last year dropped to 26%, down from a high of 72% in 1990 and the lowest level in two decades, a new analysis of the tax agency's data found.
Additionally, the time the IRS spent on each large corporation also dropped by 20% over the last five years, according to the analysis by the Transactional Records Access Clearinghouse, a data research organization at Syracuse University.

The analysis also showed a 33% decrease since 2002 in the number of in-depth examinations the IRS conducts on large firms with assets of $250 million or more.

The declines occurred as the IRS increased audit rates of small and midsize corporations, raising the overall number of corporate audits. That strategy shift came with a potential financial cost, the analysis said, because audits of the smaller firms produce recommendations for additional taxes as low as $474 per audit hour, compared with $7,498 per audit hour for the largest companies.