IRS problems aren't as complicated as they look once you see the structure. I'm attorney Darrin Mish. I've represented taxpayers before the IRS for three decades \u2014 in Florida, Colorado, Texas, and internationally. Here's the plain-English breakdown.<\/p>\n
On Sunday, the Transactional Records Access Clearinghouse (TRAC), a non-partisan group associated with Syracuse University, released a report claiming that the IRS has not been auditing large corporations as much<\/a> as they used to before.\u00a0 Last year, the IRS audited only one out of four of the companies with at least $250 million in assets, the lowest proportion in more than 20 years. \u00a0Click here to watch or read more information on IRS Back Taxes.<\/a><\/p>\n TRAC suggests this minimal percentage of auditing among the \u2018big boys\u2019 of business points to a perverse quota system where the IRS focuses more on small and medium sized companies in their auditing efforts.\u00a0 The group expressed concern that this action of avoiding the large corporations could cost the country a lot of lost revenue as it has been shown that larger companies typically pay much more in back taxes and under-reported taxes than their smaller counterparts.<\/p>\n TRAC\u2019s findings were swiftly rebutted by the IRS who have for many years disputed TRAC\u2019s methods of coming up with their conclusions.\u00a0 Among other things, the IRS put forth that the report by TRAC does not take into account the number of man hours the IRS put into working with companies before they file their tax returns to ensure that their returns do not contain underpayments or inaccuracies.\u00a0 The IRS points out that the average amount of money per hour auditors have recovered in 2009 was $9,704.\u00a0 This represented a $2,776 rise compared to the corresponding rate of $6,928 in 2005.<\/p>\n But in TRAC\u2019s report, since 2005, the number of hours the IRS has spent auditing large corporations fell by 33% whereas the number of hours spent auditing small companies rose by 30.4% and that for mid-sized companies grew by 12.6%.\u00a0 The same pattern shows in the number of audits.\u00a0 Since 2005, the number of IRS audits<\/a> of large companies fell from 4,693 to 3,675 cases which represents a decrease of 21.7%.<\/p>\n But the IRS contends that 2005 is not a suitable year of reference because it was the year when the IRS conducted a major drive to close all audit cases from previous years.\u00a0 As a result, there was a spike in the number of audits conducted in 2005.\u00a0 Another point brought up by the IRS was that in 2009, it had audited 100% of all companies with assets over $20 billion and 50% of all companies having assets between $5 and $20 billion.<\/p>\n At the beginning of this year, IRS commissioner Doug Shulman announced a new requirement for all major corporations to include a detailed statement in their tax return describing any potentially questionable deductions.\u00a0 This is to enable IRS auditors to focus on areas where they are most likely to recover an underpayment.<\/p>\n