IRS audits of big corporations down since '05

Even though "on an hour-by-hour basis, IRS audits of all corporations show that misreported tax dollars among the giants came to $9,354 per auditor hour," the big scary IRS has cut back on audits of big corporations (w. assets of $250 M or more) by 33 percent since FY 2005.

Meanwhile, "audit hours for the small companies (less than $10 million in assets) jumped by 30 percent and the hours devoted to examining mid-size companies (assets of $10 million to less than $250 million) increased by 13 percent."

This is not how you win friends, influence people, and fill federal coffers with unpaid taxes. You can call me a class warrior for saying this, but it makes sense both fiscally and morally to spend resources auditing the big fish in our economy first.

The authors attribute this discrepancy to perverse incentives in the IRS to do more, quicker audits, which they can accomplish by focusing on small and medium-sized businesses. A more cynical explanation is that bigger corporations have more political pull that they can use to avoid IRS audits.

Despite Rising Deficits, IRS Audits of the Largest and Richest Corporations Decline

TRAC IRS

URL: http://trac.syr.edu/tracirs/newfindings/v15/