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March 18, 2016

Budget Cuts Limit IRS’s Time Spent on Large Business Audits
By Jason Bramwell

A new analysis released on March 16 shows the negative effect budget cuts have had on the time and manpower the IRS spends on auditing the tax returns of large corporations. While the number of audits of big companies – those with $250 million or more in assets – fell by only 7 percent from fiscal year 2010 to fiscal year 2015, total revenue agent audit hours dropped by more than a third (34 percent), according to an examination of IRS data by Syracuse University’s Transactional Records Access Clearinghouse (TRAC). For the giants of the business world – those with $20 billion or more in assets – revenue agent audit time dropped 47 percent from FY 2010 to FY 2015. During that same period, additional taxes of large corporations uncovered by IRS agents that would have been lost to the government dropped by almost two-thirds (64 percent) – from $23.7 billion to $8.5 billion. For giant corporations, recommended additional taxes dropped by almost three-quarters (71 percent). “Unless there has been a dramatic improvement in the way big corporations complied with complex requirements of the tax laws over the FY 2010-2015 period, this would mean that the potential loss to the government now amounts to at least $15 billion per year,” TRAC states.

Transactional Records Access Clearinghouse, Syracuse University
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