{"id":528293,"date":"2010-04-15T06:00:32","date_gmt":"2010-04-15T10:00:32","guid":{"rendered":"http:\/\/washingtonindependent.com\/?p=82272"},"modified":"2010-04-15T06:00:32","modified_gmt":"2010-04-15T10:00:32","slug":"on-tax-day-the-irs-is-preparing-to-look-closely-%e2%80%94-at-you","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/528293","title":{"rendered":"On Tax Day, the IRS Is Preparing to Look Closely \u2014 at You"},"content":{"rendered":"<div id=\"attachment_82273\" class=\"wp-caption alignnone\" style=\"width: 490px\"><img loading=\"lazy\" decoding=\"async\" class=\"size-large wp-image-82273\" title=\"Internal Revenue Service\" src=\"http:\/\/washingtonindependent.com\/wp-content\/uploads\/2010\/04\/irs-480x346.jpg\" alt=\"Internal Revenue Service\" width=\"480\" height=\"346\" \/><\/p>\n<p class=\"wp-caption-text\">The Internal Revenue Service building in Washington (Flickr: functoruser)<\/p>\n<\/div>\n<p>Today is the deadline to file federal income taxes, and individuals and  businesses are scrambling to get their books in order. The  recession continued to batter individuals and families in 2009, with  income falling and unemployment rising. But corporate profits started to  rebound &#8212; nowhere more spectacularly than in the financial sector.  Given those fundamentals, one might imagine that the Internal Revenue  Service would focus more on corporations than individuals or small  businesses.<\/p>\n<p><div id=\"attachment_2754\" class=\"wp-caption alignleft\" style=\"width: 140px\"><img loading=\"lazy\" decoding=\"async\" class=\"size-thumbnail wp-image-2754\" title=\"debt\" src=\"http:\/\/www.washingtonindependent.com\/wp-content\/uploads\/2008\/08\/debt-150x150.jpg\" alt=\"Image by: Matt Mahurin\" width=\"130\" height=\"130\" \/><\/p>\n<p class=\"wp-caption-text\">Image by: Matt Mahurin<\/p>\n<\/div>\n<div class=\"floatButtons\">\n<div style=\"float: left; margin-right: 10px; margin-bottom: 10px;\"><script src=\"http:\/\/digg.com\/tools\/diggthis.js\" type=\"text\/javascript\"><\/script><\/div>\n<div style=\"float: left; margin-bottom: 10px;\"><script type=\"text\/javascript\"\n\tsrc=\"http:\/\/d.yimg.com\/ds\/badge2.js\"\n\tbadgetype=\"square\">\n\t<?php the_permalink(); ?><\/script><\/div>\n<div style=\"float: left; margin-right: 10px;\">\n\t<script type=\"text\/javascript\">\ntweetmeme_source = \"TWI_news\";\ntweetmeme_service = \"bit.ly\";\n<\/script> <script src=\"http:\/\/tweetmeme.com\/i\/scripts\/button.js\" type=\"text\/javascript\"><\/script>\n<\/div>\n<div style=\"float: left;\"><a name=\"fb_share\" type=\"box_count\" href=\"http:\/\/www.facebook.com\/sharer.php\">Share<\/a><script src=\"http:\/\/static.ak.fbcdn.net\/connect.php\/js\/FB.Share\" type=\"text\/javascript\"><\/script><\/div>\n<\/div>\n<p>But a new report from the Transactional Records  Access Clearinghouse, a nonpartisan research group affiliated with  Syracuse University, shows that throughout the downturn, the agency has  gone after fewer and fewer big businesses and more and more mom-and-pop  outfits &#8212; the traditional engine of job growth.<\/p>\n<p>Five years ago,  the IRS instituted a \u201cperverse quota system,\u201d according to TRAC,  pressuring auditors to complete more audits, rather than to recover more  tax losses or to go further in depth. As a result, auditors turned away  from more complicated and larger companies, despite clear evidence that  they can defraud the federal government for much more vast amounts than  their smaller counterparts. In 2009, the IRS performed audits on only  around 25 percent of the biggest corporations &#8212; representing the lowest  audit-rate in 20 years. Since 2005, the IRS has audited 22 percent  fewer big businesses and allocated 33 percent fewer hours to looking at  big-company books. Time spent on small businesses and the number of  small businesses examined, on the other hand, have increased.<\/p>\n<div>\n<p>\u201cThe decision to audit the smaller companies  does not help the government collect more taxes,\u201d the TRAC study says.  \u201cThis is because the data indicate that the larger the business, the  larger the dollar amounts of tax underreporting and back taxes on  average that they may owe.\u201d Indeed, the IRS itself estimates that of the  $50 billion collected in back taxes via audits last year, around 60  percent comes from the audits of big businesses.<\/p>\n<\/div>\n<p>&#8220;The  system is perverse and counterproductive,&#8221; argues Susan Long, the  co-director of TRAC and a professor of managerial statistics at  Syracuse. &#8220;The number of revenue agents actually peaked in 1988, and  Congress has whittled back [the IRS&#8217;s] appropriations and thus the  amount of hours that they had for agents to look into corporate profits.  But we actually looked at a period where Congress was providing more  resources to the IRS [between 2005 and 2009], and they still continued  to cut back on these kinds of audits.&#8221;<\/p>\n<div>\n<p>More  troubling, TRAC reports that the IRS is going after fewer financial  firms &#8212; despite increasing fraud in the run-up to the recession and  quickly rebounding corporate profits since then. In 2008, the IRS  audited just 15 percent of large financial companies, the low point in a  five-year decline. That year, for instance, Goldman Sachs earned $2.3  billion in profit and paid an effective corporate income tax rate of  just one percent. Long says that TRAC requested data regarding 2009  audits and taxation for the financial sector, but the IRS &#8220;refused to  produce&#8221; the data. (TRAC asks for IRS information via Freedom of  Information Act requests.) &#8220;Overall, audits of large corporations are  going down, and the financial sector is such a large portion of that  corporate sector,&#8221; Long says. &#8220;Plus, a very, very complicated one. It is  hard to imagine any fundamental change in trends.&#8221;<\/p>\n<\/div>\n<p>The  IRS disputes some of TRAC&#8217;s findings, telling <a id=\"w5jk\" title=\"reporters\" href=\"http:\/\/www.nytimes.com\/2010\/04\/12\/business\/12audit.html\">reporters<\/a> that it audits every company with  assets over $20 billion and has changed the rules this year to help  agents flag troublesome business filings. (The IRS did not respond to  TWI&#8217;s repeated requests for comment.) But TRAC contends that the  agency&#8217;s refutation of its data in several cases does not make sense.  For instance, the IRS claims to audit 118 percent of one income-bracket  of companies, but has not yet explained why the number is above the  logical limit of 100 percent.<\/p>\n<p>And in another sign that  individuals, rather than big corporations, will be subject to IRS  scrutiny, the agency recently promised to expand audits for new  homeowners using the Obama administration&#8217;s tax credits \u2013 an $8000  credit for first-time buyers and $6500 credit for repeat buyers,  available for purchases between January 1, 2009, and April 30, 2010.  More than 1.5 million people have claimed the credit, and the IRS has  promised to audit those claimants heavily.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Internal Revenue Service building in Washington (Flickr: functoruser) Today is the deadline to file federal income taxes, and individuals and businesses are scrambling to get their books in order. The recession continued to batter individuals and families in 2009, with income falling and unemployment rising. But corporate profits started to rebound &#8212; nowhere more [&hellip;]<\/p>\n","protected":false},"author":6662,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-528293","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/528293","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/6662"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=528293"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/528293\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=528293"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=528293"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=528293"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}